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How 9/11 changed Wall Street forever

September 8, 2021, 11:00 AM UTC

David Lolli usually took the train to work in Manhattan every morning from his home in Morristown, N.J. But on the morning of Sept. 11, 2001, with his wife, Alice, six months pregnant, Lolli decided to drive into Jersey City and then take the ferry across the Hudson River to his office at the World Trade Center. 

Lolli had an early meeting scheduled that morning with his team at OppenheimerFunds on the 37th floor of the South Tower. Alice worked nearby, near Wall Street in Lower Manhattan. But heavy traffic delayed their morning commute. 

“I was so mad. I was driving in, and I was pissed off because I was missing my meeting,” Lolli told Fortune. But when the couple arrived at the ferry station, the day’s horrors had already commenced. 

“We got on the ferry and everybody, at that point, was just saying it was a small plane [that hit the North Tower],” Lolli said, adding that it felt like it was an accident at first. As the ferry carrying Lolli and his wife pulled up to docks near the World Financial Center, the couple had a clear view of the North Tower, WTC 1, burning. 

At that point, the couple were still planning to go to work. They opted to avoid the North Tower area, walking south around the World Trade Center complex. 

“As we started walking by, that’s when the second plane hit—hit my building, number two,” Lolli said, adding it felt like the plane circled right above their heads. “My brain totally blocked out the sound. I saw the plane coming at the building, and I don’t remember even how loud it was. It’s weird how your brain just shuts down.” At that point, Lolli knew it was no accident. 

“We turned around, ran back to back to the ferries, and got on the last ferry that was just pulling out,” Lolli said. The scene was so chaotic and things happened so quickly, Lolli said, the ferry operators were still asking commuters to show tickets, even as people rushed onto the boat. The ferry they managed to get onboard was going to Hoboken, so Lolli and his wife then had to walk about two miles to their car parked in Jersey City. 

As they walked, they could see the plumes of smoke billowing across the skyline. When they finally got home, it dawned on them that the bad traffic that morning had likely kept them both safe.

All of Lolli’s Oppenheimer colleagues escaped the building that day with only a few minor injuries. But in the aftermath, Lolli worked from home for a few weeks before being transferred to the firm’s Connecticut office, where he worked four days a week and stayed overnight at a nearby hotel. “Don’t have the baby while I’m gone,” Lolli joked to his wife. 

Their daughter was born three months to the day of the tragedy: Dec. 11, 2001. 

How the financial industry coped in the wake of 9/11

Oppenheimer was just one of many financial firms impacted by the 9/11 attacks. About 40% of the 2,753 people killed in the attack in New York worked in finance, according to the Wall Street Journal. Investment firm Cantor Fitzgerald, which had offices above the 100th floor in the North Tower, suffered the greatest loss of life during the attacks: 658 employees lost their lives.

“Basically, we went from being a great company that was making a million dollars a day to a company that was losing a million dollars a day,” CEO Howard Lutnick told NPR. Lutnick, who was taking his son to his first day of kindergarten that day, said the firm vowed to keep going. “So what do you want to do? You guys want to shut it down? Or do you want to work harder than you’ve ever worked before in your life? And that was the moment where the company survived.”

Meanwhile, companies like Morgan Stanley, American Express, Lehman Brothers, the Bank of New York, and Keefe, Bruyette & Woods all had major offices in the World Trade Center complex—many of which had to use backup facilities or rent alternate space in the wake of 9/11. 

Financial companies were already required to have backup sites and systems, but 9/11 brought home how dangerous it could be to have all employees and electronic systems in one place. Many financial companies eventually moved to other areas of New York City, even once operations normalized. Oppenheimer, for instance, temporarily rented space in midtown Manhattan for its New York City employees before moving its headquarters back to Two World Financial Center when what is now known as Brookfield Place reopened, Lolli said. 

Over half of the office tenants in downtown Manhattan, 55%, were financial and insurance companies in 2001. Today these industries make up only about 30% of tenants in the area, according to the Downtown Alliance. 

But while some financial companies were forced to relocate after 9/11 and left their office spaces, New York’s financial district was changing even before the terrorist attacks, according to Richard Sylla, a financial historian and professor emeritus of economics at New York University.

“The trend of moving away from Wall Street was well in place before 9/11 and then I think that 9/11 accelerated it,” Sylla told Fortune. Citibank and its predecessors, for example, had headquarters at 55 Wall Street but vacated the space in the early 1990s. Today, event space Cipriani Wall Street occupies the historic building. 

Consolidation within the industry also played a role in reshaping New York’s finance industry. Like Oppenheimer, many of the financial companies survived the attacks but are no longer around today because of the 2008 financial crisis and general consolidation within the industry over the past two decades. That includes Lehman Brothers, PaineWebber, Euro Brokers, IQ Financial Systems, Salomon Smith Barney, Sandler O’Neill & Partners, and First Union Securities, which merged with Wachovia just days before the attack. Wells Fargo acquired Wachovia in 2008. Stifel acquired Keefe, Bruyette & Woods in 2013, but the firm still operates as an independent subsidiary, while Bank of America took over Merrill Lynch in 2008

And while some firms have bounced around Manhattan before moving back to the financial district, others still operate away from Wall Street, including Morgan Stanley, Cantor Fitzgerald, and Marsh McLennan, all of which still have their headquarters in midtown Manhattan. 

Today, Manhattan’s financial district is much more residential and commercial, thanks in part to the Liberty Bond program, which sent at least $21 billion to Lower Manhattan for new development, according to Amir Korangy, founder of the Real Deal and professor of architecture at Columbia University. Addresses such as 30 Park Place, 45 Park Place, and 125 Greenwich Place have paved the way for luxury residential living, for example. 

“Many of the buildings where those firms were located have been transformed into residential condos. That’s the interesting thing about Wall Street—this famous business address is now becoming a residential address,” Sylla said. 

Effect on business and workers continues to play out 

The impacts of 9/11 on the financial industry were not just physical. In the aftermath of the attacks, the New York Stock Exchange remained closed until Sept. 17, 2001. But that delayed reopening was due, in part, to the expected plunge the markets would experience if reopened immediately amid the chaotic days directly following the attacks. In fact, the Securities and Exchange Commission noted in a report released a year after 9/11 that the “U.S. financial system continued to perform its vital economic functions.”

But there were still lessons learned that the SEC sought to implement, including the need for more in-depth business continuity plans that took into account the potential for wide-area disasters and for major loss or inaccessibility of workers. The SEC particularly keyed into how ​​clearance and settlement systems, which help facilitate securities trading, seized up after the attacks.

“The financial industry’s dependence on telecommunications is well known, and 9/11 provided a vivid demonstration of how disruptions to the nation’s critical infrastructure can and will close markets and disrupt payment flow,” Federal Reserve Vice Chairman Roger Ferguson said in a speech in May 2002

Additionally, while many companies thought their backup systems and contingency sites were adequate prior to the attacks, few actually had enough redundancies in their systems to withstand the level of devastation wrought by 9/11. 

Wall Street firms’ spending on contingency planning and security measures jumped from $1.8 billion in 2001 to a high of $3.8 billion in 2005, according to estimates by consulting firm Tower Group that were reported by Institutional Investor in 2011.

The attacks also caused psychological effects, some of which still extend to this day in some shape or form, Sylla said. “The recovery is fairly complete, but it’s in people’s heads, what happened there on 9/11,” he said. 

​​The World Trade Center complex totaled 15 million square feet of office space, and when the attacks destroyed it, the area lost out on some big-name tenants who no longer wanted to have anything to do with skyscrapers, Korangy said. Additionally, many companies felt that being located on the 50th floor or above in a prominent downtown tower was now a liability. The area now has some big companies again, but most have a second location in Manhattan, as well as in New Jersey and Connecticut. In fact, finance companies are required to have contingency plans so that even if their headquarters were to be destroyed, the business could still run.

For individuals like Lolli, the effects were more personal. He, for instance, didn’t visit New York’s financial district until Oppenheimer moved its offices back to the area in 2003. And it’s perhaps not totally coincidental that Oppenheimer’s new downtown offices are now on lower levels than on 9/11, with Lolli sitting on the 14th floor. 

Twenty years on, the attacks still have an effect on Lolli’s daily habits. “I have not taken the PATH train since then,” Lolli said. “In my mind, it’s safer to be on the ferry. It’s more money, but it’s worth it for me. I don’t really want to be underground if something goes on, or under a river. So that’s one way I dealt with it, mentally.” For others, 9/11 caused them to be more prepared, both personally and professionally.

Many financial firms still take time to remember the tragedy, with Cantor Fitzgerald typically holding charity day in remembrance. The firm distributes 100% of its global revenues from the annual event to the Cantor Fitzgerald Relief Fund and other charities, raising approximately $180 million globally since its inception.

As time goes on, however, this too will fade, Sylla said. Some of those working in the World Trade Center complex have already retired, and the new class of brokers and analysts remember 9/11 as a historic event, rather than from personal experience. And even those memories will continue to fade, much like the Great Fire of 1835 that demolished 700 buildings in Lower Manhattan and the bombing of Wall Street in 1920.

“Wall Street is quite resilient,” Sylla said. “A lot of bad things have happened, but it has recovered from them.”

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