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The irony was that had Gregory really thought about why his project had failed, he might

have understood the firm's inherent problems, and realized that a cacophony of opinions

at the top was something not to be ignored, but embraced. Had he interpreted the material

differently, Lehman might still be alive.

Despite appearances and the endlessly self-perpetuated myth of being a mighty gorilla,

Dick Fuld was never truly synonymous with Lehman (never mind that it was a public

securities house, and therefore owned by its shareholders and not by him).

No, the hopes--and heart and spirit--of modern Lehman lived and died with two men with

huge presences, both of whom served as Dick Fuld's number twos, his confidants, his

presidents, his victims.

Lehman was made great and almost brought down twice in the past thirty years, thanks to

these two men. Dick Fuld was pretty much a lieutenant to each, which is why in some

ways the second half of this book reads like an echo of the first. Some men refuse to learn

from the past.

The first Lehman president is buried in Farmingdale, Long Island. He was 51 when he

died in 1997. T. Christopher "Chris" Pettit stood six feet two inches and had dark hair and

piercing brown eyes; when he spoke both male and female hearts melted. Prior to joining

Lehman, he graduated from West Point and was an Army Ranger in Vietnam.

On a tip from a friend, in 1977 Pettit applied for and got a job with Lehman Commercial

Paper Inc. (LCPI), the commercial paper trading unit of the investment house Lehman

Brothers. With his extraordinary leadership skills, Pettit rose with almost unprecedented

speed to be head of sales, effectively Fuld's number two within LCPI.

LCPI at the time was run by Lewis "Lew" Glucksman, an obese giant of a bond trader

who ran Lehman's capital markets division; Glucksman had ousted Peter G. Peterson, the

urbane former secretary of commerce, as the chairman of Lehman Brothers in 1983.

Glucksman had argued that since he made the most money, he should run the business.

He won that argument.

Fuld was one of Glucksman's proteges. He operated the way Glucksman had:

tyrannically. The men were similar, though they looked nothing alike. Fuld, who is five

feet eleven inches and has dark eyes, was a fit squash player, in contrast to his slovenly

mentor. Both men said little in the office, but were notorious for shouting insults and

expletives.

In 1984 when Shearson American Express acquired Lehman and Glucksman was bought

out of the business, Fuld rose to run Lehman's fixed income division. Pettit was his

complementary number two. Pettit was the man on the ground, in the trenches with his

soldiers. He could be tough, but he was respected. Pettit was the man the traders really

worked for, the leader they revered. Pettit would go to Lehman parties and give speeches

that left everyone ready to put down their cocktails and head straight back to the office.

For 10 or so years, while Lehman was merged with Shearson and American Express,

Fuld reigned largely unseen. He was "neither a leader nor a dazzling intellect," one

former trader says.

After Lehman was spun out of American Express and became a public company in 1994,

the only person who could threaten Fuld's place as head of the new investment bank,

Lehman Brothers, was Pettit. And as long as Pettit had the loyalty of the troops, there was

nothing Fuld could do about his rival.

Until, that is, his rival, for the first time in his life, made himself vulnerable. Pettit was

struggling to manage his private life at that time; he had a dying sibling and a dying

marriage. He was also having an affair. None of this ought to have mattered in the

workplace, but his three best friends ensured that it did. Their names were Joseph "Joe"

Gregory, Stephen "Steve" Lessing, and Thomas "Tom" Tucker. All worked for Lehman.

In fact, together, they ruled Lehman, at least the fixed income division that was

essentially the new independent Lehman. All had carpooled