Starting Over

When the planes slammed into the World Trade Center on Sept. 11, few companies were as hard-hit as a small, close-knit firm called Sandler O'Neill. Of the 83 people in the office that morning, only 17 got out alive. Employees lost mentors, assistants lost bosses, friends lost friends. This is the story of what happened next.

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Before Sept. 11, no one at Sandler O'Neill ever thought of Jimmy Dunne as vulnerable. He was a tough Irishman and a rough-and-tumble Wall Street trader. Within the firm, Dunne played the enforcer, the bad cop to Sandler and Quackenbush's good cops. If you were getting fired, he would deliver the news. If you'd screwed up, he'd let you know it. His blowups were famous. Once he yelled at a trader, "The next time you do something smart, monkeys'll fly out of my ass."

During the course of its 13-year existence, Sandler O'Neill had etched out a profitable existence as an investment bank that focused on small and medium-sized banks--institutions that fell below the radar of the Wall Street big boys. Sandler managed their IPOs, traded their bonds, researched their stocks, and helped them merge with and acquire other banks. And over the years, the firm's culture evolved in ways that reflected its three leaders. Like Dunne, it was hard-charging and scrappy. Like Sandler, it was built not just on business relationships but on lasting friendships with clients. Quackenbush, for his part, brought a cool diplomacy to the firm. He was the negotiator, a man who could make two parties of a transaction leave the table feeling they'd both won. He had a calmness about him, and a charisma, that caused people to want his approval.

Almost immediately after the attacks, Dunne began saying, "I need to be more like Herman now. I need to be more like Chris now." He has said it so often it has become his mantra. He wants Sandler O'Neill to remain the same kind of firm it was before Sept. 11, to still embody the best of its three leaders, even though two of them are dead. So he can't just be tough and scrappy. He has to learn to be patient and supportive as well. This isn't just an emotional issue; it's a business necessity. Sandler's employees are so fragile now that they couldn't handle the old Dunne blowups. It's hard to change, though.

There is a knock at the door. It's Jon Doyle, 36, the head of Sandler's bond desk. A week after the WTC attack, Dunne named Doyle a managing partner and gave him responsibility for the day-to-day running of the firm--the job Dunne used to have.

"What are we going to do about bonuses?" Doyle asks--a question that is a lot more complicated than it used to be, since it means figuring out bonuses for dead employees as well as living ones. "We're going to do what we've always done," says Dunne. His tone of voice is different now; he's switched into business mode. "We're going to have a meeting of the executive committee, and you, me, and Fred are going to decide what to do." Fred is Fred Price, 47. He used to be the co-head of research. Now his title is COO--another appointment Dunne made the week after Sept. 11. Price is in charge of finding new office space, rebuilding the firm's back office (which was destroyed in the attack), and helping the families of Sandler's dead. Dunne, Doyle, and Price now run Sandler O'Neill.

Doyle leaves, and immediately someone else steps into the office. It's Bobby Castrignano, a Wall Street veteran who is new to Sandler. A 51-year-old retired Goldman Sachs vice president, Castrignano showed up at the firm's emergency headquarters on Sept. 17 and volunteered to pitch in. No one at Sandler had ever met him before. Now he's working on the equity desk. Prior to Sept. 11, Sandler was a market maker for small bank stocks; in its current crippled state, it can't carry that load. Twenty of the 24 people who worked on the equity desk were killed in the attack. Its one surviving salesperson, Suzanne Ircha, is back at work--but the only surviving trader hasn't been able to bring himself to return. Castrignano is helping Dunne hire people for the desk.

"Okay, what do we got?" Dunne asks. He picks up a resume. "That guy," he says, referring to a man he'd interviewed recently, "was a totally soft Wasp, everything I don't like. We need to ask people, What's the size of your heart? If he's going to be down in the hole with me, I need to know if the guy's got heart." He moves the resume to the out pile.

The phone rings. It's a friend from Morgan Stanley calling to tell him about some upcoming layoffs. The massive layoffs taking place all over Wall Street have been a boon to Sandler O'Neill. Good people--people who would have been out of the firm's reach just months ago--are now knocking on its door. "If there's someone good getting cut, let me know," Dunne tells his friend. "But only if they're good. I can't waste time on duds."

Dunne calls Mark Fitzgibbon, the co-head of research, into his office. Fitzgibbon was in the World Trade Center when the planes hit, but he got out before the buildings collapsed. Since Sept. 11, Fitzgibbon has temporarily abandoned his research duties to take over the syndicate desk. Research is an important service that an investment bank like Sandler provides, but it doesn't bring cash in the door. The syndicate desk does: It's where the firm manages all the deals it's involved in. As Sandler struggles to get back on its feet, nothing is more important than getting deals done. For eight years the same two people had run the syndicate desk for Sandler. Now they're both dead.

Dunne gives Fitzgibbon the name of a contact at J.P. Morgan Chase. "He's putting us in his deal, so find out what we need to do," says Dunne. Since Sept. 11 this has happened a lot: Competitors have thrown commissions Sandler's way, and big firms like Merrill Lynch and Goldman Sachs have included Sandler in their deals without Sandler having to do anything in return. The J.P. Morgan deal means a $23,000 fee--small potatoes by Wall Street standards, maybe, but Dunne's not too proud to take it. "I want that check!" Dunne calls after Fitzgibbon.

Just then, the phone rings. Dunne picks it up and listens intently for a few minutes. "Don't worry about this," he says fiercely. "I am personally going to talk to them about this; they are going to have to deal with Jimmy Dunne now."

The call ends, and Dunne falls silent. Then he explains: The caller was the wife of one of his dead partners. She was asking him to help her handle some of her late husband's relatives, who have begun arguing over how parts of his estate should be managed. For Dunne, this is as much a part of rebuilding Sandler O'Neill as getting the equity desk up and running again. "Fifteen years from now," he says, "my son will meet the son or daughter of one of our people who died that day, and I will be judged on what that kid tells my son about what Sandler O'Neill did for his family." He looks up at me, and there's that grief again. The sad near-past accompanies him every step as he tries to go about the business of moving ahead.

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