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it go and not worry about the friendship. Pettit was too far gone. It would be better for the

business, Gregory told Tucker, to relinquish the friendship. Tucker didn't say much in

reply. He'd already decided that he was leaving Lehman. He'd seen quite enough of life

on Wall Street. Unlike Pettit, he remembered the oath they took--and he wanted to keep

it. Tucker still wanted to be a "good guy."

Pettit may have been distracted, but he clearly sensed that forces were aligning against

him. Around this time, he told people to stop talking to John Cecil or Dick Fuld; he told

them to come to him with their queries.

Chapter 9

The Ides of March

You think you would have liked Chris Pettit--but by the end you would not have liked

him. He became someone else.

--John Cecil

By the start of 1996, both Lehman's equities and investment banking units were still

doing poorly compared to fixed income, which was a weakness that Lehman needed to

fix. Their respective heads, Paul Williams and Mel Shaftel, were considered overmatched

by almost everyone save Chris Pettit, who repeatedly defended them. He used to say to

Tom Tucker, "Listen, managing bankers is like herding cats" (in other words, impossible)

and "Mel is the only person I consider objective and reliable. I really can't think of

anyone better for the job."

Fuld wanted to hire Joe Perella, from the now-defunct Wasserstein Perella boutique

mergers and acquisitions (M&A) firm, to run banking. Though Perella had interviewed

with the firm and seemed very interested, Pettit was none too keen on him. "He will show

up at 10 in the morning and leave by three," Pettit complained to other senior executives.

His frosty attitude had been clear to Perella during their interview.

Perella opted to join Morgan Stanley instead. Fuld would call him regularly, like a jilted

lover, and ask, "Are you happy?"

"What the hell does it matter what hours Joe Perella works? " complained Mike Odrich,

Fuld's bright chief of staff at the time. "He's the best M&A banker out there. We should

have done everything to get him."

Deep down, Pettit must have known his heads of banking and equities were weak. He

moved Tucker over to supervise Williams and help him fix equities. After several

months, Tucker told Pettit: "Chris, he can't do it."

Williams's deputy, Leo Corbett, even went to Tucker and Pettit and said, "You have to

fire Paul. He 's just not up to the job."

But Pettit was very close to both Shaftel and Williams, who spent so much time at Pettit's

house that many people, neighbors in particular, thought he and Chris were blood

relatives.

Pettit held out against firing the duo even when the rest of the operating committee

disagreed with him. "Show me better candidates," he kept saying.

When Joe Gregory started calling for Pettit's pals to be fired, an ugly confrontation was

inevitable. Gregory told Fuld that if Pettit wouldn't fire Shaftel and Williams, then Fuld

should fire Pettit--for the good of the firm, of course.

Gregory realized that the only way to convince Fuld--who was rarely willing to make the

tough decisions--that he had the clout to win a fight with Pettit was to show him that

Lessing and Tucker--Pettit's two best friends and very influential men in the firm--would

back him.

Lessing obliged. Tucker simply told Fuld he thought Chris was making some wrong

decisions and left it at that. He had no idea that a coup was afoot, and that he'd just cast

the deciding vote.

Gregory then gave Fuld a plan: remove Pettit from the position of head of the operating

committee, then create a smaller executive committee, and thereby limit Pettit's power.

He knew Pettit would resist this shake-up.

Odrich warned Fuld not to have a showdown with Pettit until he had the Lehman board

members on his side. Odrich knew Pettit would never think to court the board. He'd long

ago ceded that ground to Fuld, and focused on managing his troops.

The board back then included Fuld, Michael