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explained. The story wound its way across the trading floor and through the halls: This

was how Fuld frittered away his workday, ordering from the L.L. Bean catalog.

One of the people who made most of the rude jokes about Fuld in those years was

Gregory, who was known to be both a hothead and a chatterbox. "When I first met Joe

back in 1980," Lessing would later say, "he was a young ball of energy--clean-shaven,

constantly in motion, the fastest man who had ever been on a calculator in the history of

mankind. But he had one problem: He looked very young."

Gregory went to the Virgin Islands in the mid-1980s and came back with a beard. He

grew it in hopes of looking older, more commanding, and thereby more appropriate for

running the trading desk. Though it didn't have the desired effect--his colleagues still

remembered his baby face--it became a kind of signature. In a world of clean-shaven,

immaculately groomed men, Gregory's beard was a power play, a defiant sign of his

confidence.

He was also known for fits of road rage. "There was one time when a cabbie cut us off in

Manhattan, just by the South Street Seaport," Tom Tucker says, "and Joe railed at him

from the car. The cabbie pulls over. Joe gets out of the car. The cabbie pulls out a tire

iron, and Joe starts to go after him. And we' re like, 'Joe, get in the car! You idiot!' "

Colleagues wondered if it was tremendous insecurity that made Gregory so susceptible to

emotional fits. "We wondered if he could never get over where he had come from and

where he got to," says one. "It was as though he'd moved up so far beyond his dreams, he

really had no idea who he actually was."

One of the many people lashed by Gregory's temper was bond salesman Craig Schiffer.

Schiffer was bright and bold; he had a habit of skipping his boss's morning meetings, and

eventually this irked Gregory so much that in the early 1990s he went to Pettit and

demanded that Schiffer be fired. Pettit talked to Schiffer, and then told Gregory they

couldn't let him go. Gregory, according to someone in Schiffer's department, went

berserk. "He screamed at Craig like I've never seen. Joe appeared to be furious that he

had lost, that he wasn't able to get rid of Craig. It was unbelievably threatening."

Fear was very much the management style of that era, and it began with Fuld.

In 1989 Pettit sent Dick Dorfman--who covered the government-sponsored enterprises

(GSEs) Fannie Mae and Freddie Mac--and Steven Carlson, a managing director, to Fuld's

ninth-floor office. They had to explain why Lehman needed to buy mortgage assets from

government-owned asset management company Resolution Trust Corporation (RTC)

stock, which was responsible for liquidating the assets of insolvent savings and loans

(S&Ls) in the 1980s crisis. According to someone in the room, Carlson said to Fuld:

"We've got to get staff on this. We've got to get full-time coverage on this. You've got to

spend some money to make money that is going to become available, in terms of cheap

assets to buy." He felt it would be the buying opportunity of the decade because these

assets were going to be dumped on the market and be cheap.

Fuld's response was typically curt: "How much money do I need to spend?"

"We think it's three or four million dollars for these kinds of things," Carlson said.

Fuld rushed to the point: "How much money are we going to get?"

Carlson and Dorfman just looked at each other. "A lot. You know, lots, " which wasn't

specific enough for Fuld, who said again, "How much money are you going to make?"

"Dick, it's an opportunity--lots."

Fuld just growled, "Get the fuck out of my office." And before they could say anything

else, he shouted: "Get the fuck out!"

The next day they came back, and Fuld didn't even look up from his desk. "How much

money are we going to make?"

"Fifteen million."

"Okay," Fuld said. "Spend the money."

Fuld was a classic capital markets thinker in that he valued a simple figure over detailed

explanations. He wanted