It was a quintessential New York story, with something in it for everyone: corporate greed, stock-price fixing, and government investigations, along with life on the Upper East Side, and the dumb things the rich do to get their kids into the right nursery schools. This last is the best part of the story, although perhaps in not quite the way you might think.
But first a recapitulation.
It was disclosed last week that Jack Grubman, once the star telecommunications analyst at Salomon Smith Barney, had told a friend that he upgraded his rating on AT&T stock in part because Sanford Weill, the chairman of Citigroup, Salomon's parent company, had helped him get his two children into the 92nd Street Y's prestigious nursery school.
Grubman had been well known on Wall Street for his dim view of AT&T's prospects. But after Weill asked him to "take a fresh look," Grubman raised his rating on AT&T from a "hold" to a "buy." A few months after that, Salomon made a lot of money selling shares in AT&T's wireless division to investors. And a few months after that, Citigroup made a grant of $1 million to the 92nd Street Y.
Meanwhile Weill, who, besides being Citigroup chairman, is on the board of AT&T, admits that he called the Y's nursery school about the Grubman children, although he does not say when he did. Anyway the nursery school accepted the children, and while Grubman now says this had nothing to do with his upgrading AT&T, it is unlikely many people believe him. They lost a bundle on AT&T, and now they know why. But life on the Upper East Side is hardly worth living if you can't get your children into the right preschool school, and that's just the way it is.
The Y's school, in fact, is one of the best. Each year it accepts some 65 children, ages 2 and a half to 5. Tuition for a 4 or 5 year old is $14,400 for a full-day program; 3 year olds are charged $11,800. Tuition for younger children depends on the number of the hours they attend school. Parents may file applications for admission, however, only after a school tour, and there are only 300 tour appointments available. To make an appointment you call the school the day after Labor Day, starting at 9 a.m.
Many parents try this, but comparatively few get through. The line always seems to be busy, and the 300 tours are booked early. The process, meanwhile, is not confined to the 92nd Street Y's school. It is repeated, more or less, at prestigious nursery schools all over Manhattan. Some parents even hire high-priced consultants to help them find the right places for their kids. There are also pre-preschools that prepare very young children for the preschools.
Now you may make of this what you will: that the East Side rich have more money than either good taste or good sense, or that something reprehensible is going on, or that the nursery school scene is really quite amusing. (Presumably you knew already that during the great bull market many, and probably most, analysts' ratings in the telecom sector were either faulty, bogus or misinformed. Grubman was not alone.)
There is, however, something here that is usually overlooked. While the East Side rich like to think it's all dog eat dog, and that getting your kid into the right school depends on who you know, there is another side.
According to one unimpeachable source, who taught until only recently in one of the most prestigious preschools, and was also involved in its admission process, the rich have less influence than they think. For one thing, there are so many of them in New York that they cancel one another out. The unimpeachable source and her colleagues usually felt embarrassed, she says, whenever the rich approached them about their kids.
"We were more interested in whether the children who were applying would pound the Play-Doh or try to eat it," she says. "You'd pay attention to that, and not to whether the parents had money. If anything, I think a lot of the rich parents, especially the aggressive ones, hurt their children's chances of getting accepted. I really do."