Wall Street executives, facing demonstrators camped for a fourth week in New York’s financial district, said they were anxious and angry for other reasons.

An era of decline and disappointment for bankers may not end for years, according to interviews with more than two dozen executives and investors. Blaming government interference and persecution, they said there was not enough global stability, leverage or risk appetite to triumph in the current slump.

“I don’t think it’s a time to make money – this is a time to rig for survival,” said Charles Stevenson, 64, the president of hedge fund Navigator Group and the head of the co-op board at 740 Park Avenue. The building, home to Blackstone Group chairman Stephen Schwarzman and CIT Group chief executive John Thain, was among those picketed by protesters on Tuesday.

“The future is not going to be like a past we knew,” he said. “There’s no exit from this morass.”

An anaemic global economy, the European sovereign debt crisis, US unemployment stuck above 9 percent and swooning stock markets have sapped the euphoria that swept Wall Street in 2009 as it rebounded to record profits after the credit crisis.

The benefits of a $700 billion (R5 501bn) taxpayer bailout and $1.2 trillion in emergency funding from the Federal Reserve have faded. This week Goldman Sachs Group may report its second quarterly loss a share since going public in 1999, according to the average estimate of 26 analysts.

Financial bubble

“They are not going to make the kind of money they wanted,” said William Hambrecht and Company, the chairman of San Francisco-based WR Hambrecht, who designed the Dutch auction of Google’s 2004 initial public offering.

“I’m not sure people really have come to terms with the fact that what we had was a financial bubble.”

New rules from the Basel Committee on Banking Supervision will more than double capital requirements for banks. Fixed-income revenue could fall 25 percent under a draft of the Volcker rule, which may outlaw so-called flow trading, according to a Monday note from Brad Hintz, a Sanford C Bernstein analyst. Leverage has been cut by more than half at banks including Goldman Sachs and UBS, and an Oliver Wyman and Morgan Stanley report estimates that regulation may reduce returns on equity by 4 percentage points to 6 percentage points.

The new rules are the result of “societal objectives of a populist administration in Washington”, private equity investor Wilbur Ross said in an e-mail. John Phelan, the co-founder of MSD Capita, a New York-based fund that manages assets for billionaire Michael Dell, said “the whole capitalist system is being called into question”.

Not everyone is worried about the banks. “I wouldn’t shed too many tears for Wall Street,” Neil Barofsky, 41, the former special inspector general for the Troubled Asset Relief Program who is now teaching a class on the financial crisis at New York University School of Law, wrote in an e-mail.

“The systemic advantage that the too-big-to-fail banks enjoyed in the lead-up to the financial crisis may be diminished in the near term, but the structure is still essentially the same and will almost certainly help catapult them to record profits and bonuses once the good times return.”

Ross, 73, the billionaire chairman of New York-based WL Ross & Company, said Wall Street’s “inherent ingenuity” should not be discounted and that “the history of the investment community shows that it will find ways to profiteer”.

Others identified potential financial bright spots, including so-called black-swan and tail-risk funds designed to protect against market shocks. One black-swan fund, Universa Investments, whose California office features a Japanese print of a wave about to break over fishermen, produced returns of 20 percent to 25 percent this year, through August, according to a person familiar with the matter.

Still, almost all corners of Wall Street are suffering. James Staley, the head of JPMorgan Chase’s investment bank, estimated last month that third-quarter trading revenue might drop by 30 percent and investment-banking fees by 50 percent. The Standard & Poor’s 500 index had its worst decline in the quarter since 2008, and Brent crude oil futures saw their longest slump.

The average yields demanded on US commercial-mortgage bonds in excess of treasuries climbed the most in three years.

“Unlike some other slowdowns, this feels more secular,” said Wilson Ervin, a Credit Suisse Group senior adviser who stepped down as chief risk officer in 2009.

Cutting back

While there had been “an understandable path” out of the turmoil of 2008, there’s a more encompassing uncertainty now, said Frederick Lane, the vice-chairman of investment banking at Florida-based Raymond James Financial.

“There’s going to be some disillusionment, similar to physicians,” said Lane, 62.

“The notion that somehow going to medical school would deliver you substantial wealth and prestige is no longer true.”

Ilana Weinstein, the chief executive of search firm IDW Group, said that she had nothing good to offer a trading executive in his early 40s who complained last month about morale at his bank, one of the six largest in the US.

“This is the first time that people don’t necessarily believe it will get better,” said Weinstein, whose Third Avenue office has two exits “like a high-end plastic surgeon” to assure discretion. “Compensation has been recalibrated.”

Michael Karp, 42, the chief executive of New York-based recruitment firm Options Group, said Wall Street pay would fall 30 percent this year, and more for executives. It would be flat or down even in businesses doing relatively well, such as emerging markets and commodities.

Those are the survivors. The biggest global banks already had been cutting jobs at the fastest rate since 2008 when Bank of America said last month that it would eliminate 30 000 positions. London-based HSBC Holdings, Europe’s largest lender, aims to shed the same amount. UBS, Switzerland’s biggest bank, is shrinking after a $2.3bn trading loss.

“Sharply” falling profits will lead to almost 10 000 financial-services job cuts in New York City by the end of 2012, according to a report released on Tuesday by New York State Comptroller Thomas P DiNapoli. The prospects for Wall Street “have cooled considerably”, he said.

“The stress levels are getting very high,” Phelan said. The 46-year-old hedge-fund manager said the current aversion to risk across Wall Street could jeopardise profits.

“It’s one of the things I struggle with: everybody’s risk-off, so should I be risk-on?” he said. “There are so many things I have to worry about.”

Two former Goldman Sachs managing directors who asked not to be identified because they were not authorised by their current companies to speak – one a former management committee member and the other a trading head – also said they were worried that investment bankers had lost their appetite for risk.

Occupy Wall Street

Uncertainty didn’t stop some on Wall Street from profiting during the US housing collapse, when Deutsche Bank trader Greg Lippmann helped create and profited from a multibillion-dollar market in subprime-based derivatives.

He said Wall Street would have fewer exotic products to sell and trade, drawing an analogy to the popular no-reservations restaurant Torrisi Italian Specialties.

“No choosing, great food, low price, no pizzazz,” said Lippmann, the co-founder of New York hedge fund LibreMax Capital.

“A couple of years ago, the hottest place to go would be someplace that they just spent $5 million decorating and they’ve got three or four models answering the phones. People want stripped-down now.”

That is not diminishing lobbying efforts to soften rules mandated by the Dodd-Frank Act, which would reduce risk, curtail proprietary trading and force more transparency in the $601 trillion derivatives market.

Large financial institutions had been “exceedingly aggressive at trying to roll back reform” and had largely succeeded, Greenlight Capital said.

Greenlight Capital president David Einhorn, 42, who bet against Lehman Brothers Holdings in the months before that firm’s collapse.

Leon Cooperman, the first Goldman Sachs Asset Management chief executive and the head of hedge fund Omega Advisors in New York, said that Wall Street had been ”excessively” blamed, and that President Barack Obama had “continued to project himself as anti-wealth, anti-business and socialist in his leanings”.

Phelan said he was worried about “social unrest”.

“My taxes are going up,” he said. “Everybody hates me. I have two friends who bought land in New Zealand. They’re trying to convince me to go.”

He was not planning to visit.

“I’m not one of those extreme people,” he said.

A version of that social unrest is taking place in lower Manhattan’s Zuccotti Park, where Occupy Wall Street protests against bank bailouts and income inequality have gained support from Nobel Prize-winning economists Joseph Stiglitz and Paul Krugman. On October 1, police halted a march over the Brooklyn Bridge, arresting about 700 people, and have used pepper spray.

“We have too many regulations stopping democracy and not enough regulations stopping Wall Street from misbehaving,” Stiglitz, an economics professor at Columbia University, told protesters the next day.

“We are bearing the cost of their misdeeds. There’s a system where we’ve socialised losses and privatised gains. That’s not capitalism.”

Bankers are not optimistic about those gains. Options Group’s Karp said he met last month over tea at the Gramercy Park Hotel in New York with a trader who made $500 000 last year at one of the six largest US banks.

The trader, a 27-year-old Ivy League graduate, complained that he had worked harder this year and would be paid less. The headhunter advised him to stay put and collect his bonus.

“This is very demoralising to people,” Karp said. “Especially young guys who have gone to college and wanted to come on to the Street, having dreams of becoming millionaires.” – Bloomberg