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Perella. Fred Segal, a former Lehman partner who was working for Wasserstein at the

time, brought his boss down to Lehman's offices and introduced him to Fuld. Wasserstein

told Fuld a harsh truth. "You' ll never get a premium valuation, because you don't have a

decent advisory banking business," he said. "So you should buy us." The meeting ended

swiftly.

Later Fuld called up Segal. "Fred," he said, "never bring that fat fuck here again."

Pettit, however, stayed Pettit, rallying the troops and diving into staff problems. The only

trouble with this approach was that Lehman was growing too big for one man to

micromanage.

But it was also around this time that Pettit first realized just how far he had come. Mary

Anne Pettit recalls Chris saying to her one Sunday evening as he was paying his bills in

his study in Huntington. "You know, I think we are rich."

Yet this never really changed his lifestyle, despite certain luxuries. There was an annual

holiday in the Caribbean with the Tuckers. The Pettits owned a boat with the Gregorys- Miss T after Joe's wife, Teresa--and they started plans for a new, big house down the

street in Huntington. But otherwise, their lives stayed the same.

Mary Anne recalls: "Chris sort of had a little prejudice against wealth. He would not

consider putting our kids in private school. We lived pretty simply. The Tuckers,

Lessings, and Gregorys--the four guys in the car--that was our social circle. We rarely

went out. We never did anything with anybody other than them."

When Pettit came home, he rarely talked about work. Mary Anne was petrified her

children would get spoiled, and refused to dole out the sort of generous allowances that

were so common among the firm's families. At the age of 15, Lara Pettit got a job at an

animal clinic because she didn't have enough spending money to buy lunches at school.

Her father was horrified when he discovered that she had a job. "What are you doing?" he

said. "You should be focusing on school-work." He put an end to that distraction by

giving her an allowance.

Years later, as Lehman was going public, Lara, who by then had worked at Lehman for

three years, still had no idea what her father made. According to the proxy released that

year, it was close to $7 million. Despite that impressive number, he still seemed

determined to never live large--although he seemed to have forgotten the promise he'd

once made to himself: Only spend 10 years on Wall Street and then get out. Otherwise

you will change.

Inside the firm, Cecil was increasingly viewed as power -hungry. It's a claim he disputes

as revisionist, but Pettit 's acolytes began to see him as their nemesis, someone who

wasn't falling into line.

The two men could not have been less alike. One managed by instinct (Pettit), the other

by intellect (Cecil). Cecil's cerebral style was viewed as somewhat antithetical to the

Lehman way. "All head, no heart" is how one senior executive put it. Another says: "We

all bristled at John Cecil." He was a typical perfectionist, too sharp for his own good. He

had this "tiny handwriting, perfectly formed lines. People weren't employees, they were '

firm members'"--which was the punch line to an infinite number of sophomoric jokes,

according to Bob Shapiro, who briefly served as CAO of Lehman Brothers before it was

spun off from American Express.

Some brokers were wary of Cecil, convinced that he would have been happy if Lehman

had become a profitable "boutique bank," while Pettit had much grander ambitions. "He

[Pettit] had one goal in sight and it was to beat Goldman Sachs. His--and Fuld's--dream

was for Lehman to be the best investment bank on the Street."

In 1994, Cecil hired a few of his former colleagues from McKinsey and put together a

group charged with cutting nonpersonnel expenses at Lehman. The team discovered

extremely wasteful habits and did their best to curb them.

For instance, they worked out that in 1993, Lehman