The Journal. - Outcry at Bank of America Over Dangerous Workloads

Episode Date: August 22, 2024

In May, an associate at Bank of America died unexpectedly after working long hours on a big acquisition. The death sparked an outcry about the all-nighters and 100-hour weeks that grind down young investment bankers. WSJ’s Alexander Saeedy spoke to over three dozen current and former employees about a pervasive culture of overwork at the bank. Further Reading: -How Bank of America Ignores Its Own Rules Meant to Prevent Dangerous Workloads  -Bank of America Urges Bankers to Sound Alarm on Overwork After WSJ Investigation  Further Listening: -Lewd Photos, Booze and Bullying: Inside the FDIC’s Toxic Culture  -JPMorgan's $75 Million Jeffrey Epstein Settlement  Learn more about your ad choices. Visit megaphone.fm/adchoices

In May, a junior banker at Bank of America died unexpectedly. His name was Leo Lucanis III. Before he died, Lucanis had been working long hours on a big acquisition, sometimes more than 100 hours a week, according to his former colleagues. After he died, a lot of people with similar entry-level jobs took to social media, sharing their concerns about working conditions on Wall Street.

When I started as an investment banking analyst, I worked 100 hours every week and was constantly sleep deprived. If you get the job, you are then a work to the bone like you wouldn't believe. Sometimes I had calls with clients at like 1 a.m. depending on their time zone. And then I would continue working until 3, 4 a.m. It is time for the industry to make some serious changes. We can no longer normalize these excessive working hours."

After Luchennis' death, Bank of America said, quote, "...our focus is on doing whatever we can to support the family and our team." The bank has rules in place to prevent overworking, and has said it takes disciplinary action when violations of its rules occur. Our colleague Alexander Saidi started looking into what happened to Luchennis. You know, it dawned on me when we were starting to report about what happened to Leo that what we were looking at could be a potential failure in the systems meant to protect young bankers. There was a lot of concern and I think anger from young people who felt scared that this could happen to them.

So Alex began investigating. He spoke to over three dozen current and former Bank of America employees who worked at offices all over the world in places like New York, Chicago, Hong Kong, Houston, Tokyo, London, and San Francisco. We spoke to people doing very different things across the investment bank, working in totally different parts of the world

with completely different bosses and managers, but the problems were the same. It was clear that what happened to this one individual was telling us something potentially much bigger about what was going on in the institution. Welcome to The Journal, our show about money, business, and power. I'm Kate Leimbach. It's Thursday, August 22nd.

Coming up on the show, does Bank of America have a problem with dangerous workloads? If only life had a remote control, you could pause or rewind. Well, life doesn't always give you time to change the outcome, but pre-diabetes does. Take the one-minute risk test today at doihepprediabetes.org, brought to you by the Ad Council and its pre-diabetes awareness partners. After about a decade in the U.S. special forces as a Green Beret, Leo Loukennis made a career

shift. He got an internship at Bank of America and ended up in New York City with his wife and two young children. He starts working for Bank of America and he does some rotations across teams. And then eventually he winds up in a full-time position for the investment bank, working in what's called the financial institutions group. This is the part of the investment bank that offers high-level corporate banking services to other financial institutions.

It's banking for banks. Exactly. It's banking for banks. Exactly. It's banking for banks. Luke Hennis was in the investment banking arm of Bank of America. His title was associate, a low-ranking job that gets you on track for a career in the field. And this spring, his team was working long hours on a big transaction. A $2 billion deal between two Midwestern banks. How significant is a project like that

for someone in his position, an investment banking associate? It's a big deal. And for an associate, it's a big deal because it's a chance to prove to your superiors that you've got the stuff to like execute when you are asked to, right, to make the bank money. Because this is a big fee generating transaction for them.

So it is a huge chance to prove yourself and kind of show yourself as an indispensable part of the team. And when you're working on a deal like this, what does that work entail? A lot of that work is sort of crunching numbers, formatting presentations. You know, it's a lot of technical grunt work that goes into making multi-billion dollar

corporate M&A happen. That's the kind of work Luke Hennis had been doing during those 100-hour weeks. Why does this kind of work require so much time? It's a good question. There I think are like two big factors. So one factor There, I think, are like two big factors. So one factor is an external factor. Mess with banking is a client-facing industry. You compete to earn a client's business. So after they've win the business, they want to do everything to please the client. And that results in what appears to be a quasi on-call status for any request change tweak that the client

wants. So, that's number one. The second is that so much of the work in investment banking is done on a hierarchy. Often bosses feel that they can really request anything even if it means completely reformatting a huge presentation that needs to be given the next day, even if that means that person has to work all night. I think the culture is one where the whims of an individual can determine an entire person's schedule. Why do people stay in these jobs? They pay a lot.

Like you know, entry level salaries for an investment analyst can go as high as $200K a year and this is for someone right out of college, right? And it also is one of the reasons why people don't feel like they can speak up. It's just conveyed to us by several people we spoke to. It's almost like this is what the money is for. And this culture of investment banking, the all-nighters and endless demands with the possibility of big rewards,

is so notorious, it's made it to Hollywood. In films like The Wolf of Wall Street. The year I turned 26, I made $49 million, which really pissed me off because it was three shy of a million a week. Or more recently, in the TV series Industry, a show where in the first episode, a junior banker dies after working long hours. Did you watch Industry as you were reporting out this story?

I've watched industry ever since it came out. Based on your reporting, is that a somewhat reasonable portrayal of this kind of work? I think, you know, season one of industry deals with the health consequences of a young investment banker who's pushing themselves away too hard. Hari's death is an unexpected tragedy. The next 24 hours and the way we respond to this are defining. And I would say that some of the anecdotes we heard were mirrored in the show. I mean, sleeping in a bathroom stall, that was reflected in the show.

This kind of intense working culture has gone on for a long time. A little over a decade ago, in 2013, an intern at Bank of America died after several consecutive all-nighters. An autopsy found that he had died of an epileptic seizure that was possibly brought on by fatigue. The death of a 21-year-old intern, Moritz Erhardt, who was working at Bank of America in London, has led to calls for an overhaul of working patterns. Bank of America appointed a group to review quote, all aspects of the tragedy, including whether employees were encouraged to work overly long hours.

The following year, the bank instituted new rules aimed to protect the lowest ranking employees. The rules included capping working hours and mandating at least one day off a week. The bank requires young people to log everything they do, the amount of hours they work, and submit that in a report to human resources on a pretty regular basis. Managers would receive a warning if any of their juniors were reported to have worked

more than 80 hours in a week, sort of like a yellow card. You know, like, watch out, like this person could be working too much. If a junior banker puts in more than 100 hours in a week, that's a red card. Human resources immediately gets involved. But Alexander's investigation found that this system hasn't been working. He spoke with several junior bankers who said their managers told them to lowball their hours. We spoke to Roy Wang in Tokyo, for example, who said he honestly logged his hours when he started it because he assumed that's what you do.

And then his manager came over and said, you can only report as many hours as is allowed by our policies. And he understood that to mean, I have to do this. This is essentially an unwritten policy, which is to violate the written policy. And from then on, he said he just reported as many as he was supposed to.

I don't think a lot of people feel that they can resist because otherwise they could lose their jobs. Right. They're like in a situation where it feels really hard to say no. Exactly. It's hard to say no to the people who determine your career path and compensation, you know? So when the only person who's really your representative and to help your career is the one telling you to break rules and break policies and work more than the bank even

thinks is healthy or normal, I think people are at a loss for what recourse they have to improve their situation. Coming up, the fallout from Leo Loukiannis' death. If only life had a remote control. You could pause or rewind. Well, life doesn't always give you time to change the outcome, but pre-diabetes does. Take the one-minute risk test today at DoIHavePreDiabetes.org, brought to you by the Ad Council and its pre-diabetes awareness partners.

This spring, Leo Loukennis was working hard to complete that $2 billion acquisition. And on April 29th, the deal was formally announced. One of the last things Leo did was attend a celebratory dinner for the transaction, and he died before coming into work the next day. — How did he die? — An autopsy found he died when a blood clot formed in a coronary artery. — Leukenis's death sent shockwaves through Bank of America. The bank sent out an email to employees offering mental health counseling services. There were meetings of individual teams within the investment bank, seniors meeting with

juniors. Already then it was known some of the circumstances around how much Leo and his team had been working prior to him dying. And nearly immediately, we reported, you know, senior bosses were telling some of their juniors, you know, we know how much you work and we are promising to be more focused on ours and how ours are reported. and how hours are reported. Has Bank of America taken any disciplinary action against managers or anyone for violating these rules against overworking?

Bank of America has said very plainly that its rules are clear. All employees and managers are expected to follow their policies when they've become aware that rules aren't being followed, disciplinary action has been taken. What the bank has done though is communicate from the top down that lying about hours cannot happen anymore. And that if anybody is being pressured to ignore rules

meant to prevent dangerous overwork, alert their bosses or the human resources department if they're being pressured to do so. A spokeswoman for Bank of America said that over the past four years, the bank received roughly 500,000 applications for entry-level roles, and attrition for associates is under 10%.

Quote, these are sought after challenging jobs. She also said the bank expects all employees, including managers, to follow its rules. So this is Bank of America. How does it compare to the rest of the financial industry? At other banks, there are some protections, and at some banks, there are actually no protections at all. At JP Morgan Chase, for example, investment bankers are only given one

protected weekend off every three months. At Goldman Sachs and Morgan Stanley, there are no formal caps on hours worked at all. If you got to work 120-hour weeks, that's what you got to work. There's no formal cap in place to stop that. Do you expect there to be any changes in the financial services industry? It's you know, the industry is still staffed by the same people. It's still governed by the same commercial realities that help create this type of environment, you know

So I think unless there's like a real genuine push from the top of organizations to clamp down on this And that might involve pushing against some of the commercial motives In play here where you have to tell a client like we cannot get this request right now Right, like this like, you know, nobody can work on this today We'll come back to you on Monday or Tuesday like I think that is the red line people are like kind of afraid to cross. And that's where the sort of human capital like meets the sort of profit and loss calculation that the banks have. And I think that that change can happen, but it will take more than just the

banks change. I think it will have to take, you know, a big part of corporate America being willing to sort of rethink how on demand and how on call people are outside of roughly normal working hours. I guess the other thing that makes it difficult is it's a competitive space. So if Bank of America doesn't do it, then JP Morgan will do it, then Wells Fargo will do it, and Morgan Stanley, and you know, down the list. A hundred percent, and they are fiercely competing for deals nonstop. And yeah, there's a clear way in which competition sets a sort of common denominator for what is normal and expected. I think the scrutiny has made it clear

that there's a gap between the rules and the enforcement of the rules. So I think the story struck a nerve with young bankers because they work these grueling hours and some of them feel they're not being protected by their employers. That's all for today, Thursday, August 22. The Journal is a co-production of Spotify and The Wall Street Journal. If you like the show, follow us on Spotify

or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.