• Choose a category
• All
• Classic-Fiction

have to get the balance sheet (as in risk) lower than expected." Fuld hadn't told Pettit yet

about the new agreement with Cohen, and yet Vinci went over to Jeff Vanderbeek, a

friend at the trading desk, and said to the man who ran the repo book, a book of shortterm loans, "Jeff, look--Dick's just told me that you're going to have to be a lot lower."

Vanderbeek (now the owner of the New Jersey Devils), according to Vinci, was tired of

getting picked on in the quarterly deleveraging issue. ("The repo book was always the

place with the most elasticity," says Vinci.) His bonuses were taking a hit because they

no longer reflected his true performance.

Vanderbeek was furious. Fuld was negotiating with Cohen, seemingly to the detriment of

his business and LCPI's loans. He bolted from his desk and went to Pettit's office. Vinci

recalls, "I' m watching from across the trading room. And there's a lot of arms being

waved, and a lot of screaming and yelling. Next thing I know, Pettit gets out of his chair,

leaves his office, slams the door, and goes into Dick 's office. And now Pettit and Fuld

are yelling and screaming at each other.

"Pettit leaves Fuld's office, slams that door, walks back to his office, and goes back to

work. I see Fuld coming for me across the trading floor, making a beeline. I have never

been so belittled and berated in my entire life. He backs me into a corner and starts

screaming expletives--'You little bleep! This is my fucking trading floor! I don't know

what the fuck you were thinking when you betrayed me!' "

Fuld felt that Vinci had broken the chain of command and had usurped Pettit's role by

telling Vanderbeek, albeit with the best of intentions.

"I was just doing the right thing, but Dick didn't like getting yelled at by Pettit, who was

just trying to protect the business. That's why we were all loyal to Pettit. That's why

Vanderbeek didn't go in to talk to Fuld. He went to talk to Pettit, because he knew Pettit

always wanted to do the right thing for the business. Fuld just wanted to do what was

politically correct for Peter Cohen and Shearson.

"Now the stupid thing about it then was that when we delevered, it was all window

dressing. We just took off the least risky assets, which were the easiest to sell. We would

make the books look like they were delevered."

Once the quarter was over, the loans would go back onto the repo book. It was just like

the cards coming on and off the wall at 9 Mill Lane a few years earlier.

LCPI must have really grated on the management of Amex and Shearson. Despite the

open arrogance of Pettit 's people, it was impossible to deny their talents.

By 1990, Tucker had risen to the top of all of Shearson Lehman fixed income sales;

Lessing was Tucker's deputy, and Joe Gregory was made head of mortgage-backed

securities sales. The Ponderosa Boys and Dick Fuld were the face--and brains--of

Shearson Lehman fixed income.

"A group of us had grown up together and worked together a long time," Lessing said

later. "We were strong. We had a certain culture. We kept pushing."

Lessing's version of "pushing," according to someone who worked for him, meant that he

spent a lot of his day climbing onto his desk and shouting "Sell!" to whip up enthusiasm.

He wasn't considered the brightest at the firm. "They only put him on the operating

committee--a committee formed of around 20 people in senior positions--so that they

could talk business in the car," someone senior to Lessing said. said. But he did have a

knack for charming clients.

Fuld was increasingly isolated from the trading floor, even though his office was right

next to Pettit 's.

One person remembered watching Fuld's secretary, Marianne Burke, work through a

stack of L.L. Bean receipts. Fuld would have an assortment of L.L. Bean polo shirts

spread across his desk--two of almost every shade, and whatever he didn't like he'd have

Marianne return. "He orders them in two different sizes and then makes up