September 19, 2008— -- It had been a long time coming, but in the last week, with the collapse of the investment bank Lehman Brothers and the distress sale of another, Merrill Lynch, thousands of jobs and some 700-billion dollars in wealth, in stock, simply disappeared.
"The gilded age is over," said Holly Peterson, wife of a multi-millionaire investment banker and daughter of multi-billionaire financier Pete Peterson.
"The whole era of conspicuous consumption and free spending and luxury ended as of this week," said Robert Frank, Wall Street Journal reporter and author of "Richistan," a book about America's super-rich.
As New York investment bankers, once called the masters of the universe, were sent packing, the super-elite tone set by multi-million dollar charity balls, birthday parties and bar mitzvahs too is threatened.
"It was almost like they had created a whole separate world," said Frank. "They were a parallel country of the rich."
Watch the full report tonight on 20/20.
"A lot of those people will have to sell their homes, they're going to cut back on the private jets and the vacations. They may even have to take their kids out of private school," said Frank. "It's a total reworking of their lifestyle."
He added that it's going to be no easy task.
"It's going to be very hard psychologically for these people," Frank said. "I talked to one guy who had to give up his private jet recently. And he said of all the trials in his life, giving that up was the hardest thing he's ever done."
And the city's leading real estate broker, Kathy Sloane, says the worst is yet to come for New York real estate. Some say it's too soon to know but she estimates the value of a $5 million apartment has already dropped almost a million dollars in value, with no end in sight.
"Because a month from now, that same $5 million apartment may be lucky to achieve $3.5 million," Sloane said. Now, in New York, some see a kind of poetic justice. The investment bankers who drove up the prices of the city's fancy co-op apartments are no longer so welcome.
"Five years ago if you were an investment banker that meant big bucks and automatic entry, and today it's a dirty word," said Peterson.
It's hardly the soup kitchen for people at the very top.
The chairman of Lehman Brothers, Richard Fuld, still has his mansion in Greenwich, CT, his oceanfront estate on Jupiter Island in FL, and his Park Avenue co-op in Manhattan.
Many at Lehman blame Fuld for dallying while his investment bank went bust, taking risks with other people's money while he cleared over $40 million in salary and stock in the last year alone.
Fuld could not be reached for comment by 20/20, but outside the Lehman offices this week, employees took glee in telling him off in pen on a portrait of Fuld.
"He made a lot of money and he lost a lot of money," said Fox business news anchor Alexis Glick, "and he made dramatic mistakes, mistakes of the highest magnitude."
Glick has been highly critical of Fuld, feeling the pain in a direct way. She has many friends at Lehman and her mother worked there for years.
"It's just unbelievably shocking," said Glick, speaking about the devastation felt by her family and friends. "So they're crying, they're sick, I mean guys have been telling me they've been throwing up because they just can't stomach what has happened.
Fuld isn't the only top executive who remains well-off despite his firm's collapse. Former Bear Stearns CEO Alan Schwartz collected more than $38 million in salary and bonuses in the last three years for which figures are available, though he and Lehman executives also saw their net worths drastically plummet as stock values crashed. Bear Stearns was on the brink of financial ruin when JP Morgan Chase bought it in March.
The CEOs get no sympathy from Lorraine Hankinson, whose husband worked for decades in the mailroom at Bear Stearns.
"The average guy when he loses, he loses everything and he's got nothing to fall back on," said Hankinson.
Like thousands of others, she's been hit hard, losing more than $7,000 of her retirement money, with no estate in Greenwich or golden parachute to fall back on.
"The little guy got the shafting, literally," said Hankinson. "We got the shafting because that in particular, that amount of money may not seem like much to those guys, but to me, it was my way to build and get a future."
Watch the full report tonight on 20/20.