• Choose a category
• All
• Classic-Fiction

Lehman's "one firm" culture, Gregory complained. This was why he had been able to

convince Fuld to let him move McDade over to run equities, even though McDade didn't

have the usual experience required for that job.

Fuld increasingly left the firm's management to Gregory, whose general directive was to

"do as much business as you can; take risk." He argued with Madeleine Antoncic, the risk

officer, that she was out of line and being too fussy when she suggested in 2006 that

falling house prices might mean the balance sheet should come down. She was gradually

sidelined, kept out of meetings, ignored, and asked--constantly--to leave the room.

Fuld, meanwhile, was out of the office a lot, visiting clients. Few employees ever caught

a glimpse of him, including the executive committee. Fuld routinely skipped the Monday

morning meetings, leaving Gregory in charge. Fuld wasn't missing much: Gregory's

agenda generally centered on what he'd done over the weekend and how much he had

spent. As one exasperated former committee member recalls: "Not once--in, say, 20

meetings, for argument's sake--did he ever ask about the business or the numbers or risk,

or anything else."

In one memorable Monday meeting, an executive committee member asked what the

firm's China strategy was. "I don't have a China strategy," Gregory blithely replied.

"That's for you guys to work out."

In 2005, Joe Perella once again came knocking on Lehman's door. He had left Morgan

Stanley and formed his own advisory boutique, Perella Weinberg Partners, and Fuld

wanted an exclusive deal with the outfit. He and Perella (who had been a mentor of Skip

McGee) even drew up a contract. The idea was that Perella would give Fuld exclusive

advice. Since he was on the outside, he could bluntly tell Fuld the kinds of things his own

staff might not. Then, Perella met Gregory--and according to someone close to Perella,

"the idea sort of died." Nobody inside Lehman was surprised. The last thing Gregory

wanted was Fuld having a direct line to somebody of Perella's stature, with zero input

from Gregory.

Gregory liked to remind senior executives that they should not confuse life with work. "I'

m a little concerned about this group of guys who are very tight in fixed income,"

Gregory once told Alex Kirk, then the head of the high yield business. Kirk would be

well advised, Gregory implied, to learn some lessons from the Lehman history books. He

bemoaned what had happened between Tucker and Pettit and the rest of the carpool guys-it hurt the firm, he said. "Rick Rieder, Mike Gelband, and Bart McDade are good

friends. They play golf together and they vacation together. If there's a time when you

think that personal closeness is interfering with business decisions, I want you to let me

know."

Rieder--who ran a proprietary hedge fund for Lehman, R3 Capital--was once given a pep

talk by Gregory, who told him that if Goldfarb ever got in his way, Rieder was to talk to

"Uncle Joe."

In 2006, McGee was still on Gregory's hit list. The investment banking group had

advised on three of the five largest mergers and acquisitions (M&A) transactions of the

year, pulling in record revenues of $3.3 billion. But the department still ranked only ninth

among its peers--underscoring perhaps more than anything else the feverish pace of the

deal flow at the peak of the bubble--and Gregory, according to colleagues, tried again to

use it as an excuse to fire McGee--or in lieu of that, undermine him as often as possible.

Gregory kept a rotating roster of teacher's pets, and he liked to dangle the CEO carrot in

front of them. According to multiple sources, he independently told Bart McDade, Scott

Freidheim, and Roger Nagioff they could all be the president of Lehman one day.

In 2004 both Freidheim and Ian Lowitt, the former treasurer, had been promoted to the

title of chief administrative officer. Freidheim's golden boy moment had come in 2004

when he gave a presentation