The Devil's Casino_ Friendship, Betrayal - Vicky Ward [8]
interests of pretty much all the senior investment bankers to get it sold. This was
precisely what happened, as detailed in a 1986 saga chronicled by Ken Auletta in Greed
and Glory on Wall Street. Glucksman was offered a $15.6 million noncompete buyout
fee (on 4,500 shares). He and most of the other partners took the money and ran.
And Gregory and Fuld began their ascents into the ruling elite of the new Lehman
Brothers.
The firm was founded in 1850 by three cotton trader brothers--Henry, Emmanuel, and
Mayer Lehman. The cotton business had evolved from trading and general merchandising
into an exchange in lower Manhattan. With the post - Civil War expansion of trading in
stocks and bonds, the firm prospered and expanded. The next great leap for Lehman
Brothers occurred after World War II, under the reign of Bobbie Lehman, who had a
Rolodex bursting with names like Whitney, Harriman, and most of the rest of New
York's ruling class. He decorated the walls of Lehman's offices downtown at One
William Street with works from his private art collection--paintings by Picasso and
Cezanne, Botticelli and Rembrandt, El Greco and Matisse. He was a gentleman, and his
great strength was that he knew how to unite the people who worked for him.
Andrew G.C. Sage II, a former employee, told Ken Auletta, "Bobbie was not much of an
investment banker. He wouldn't know a preferred stock from livestock, but he was a hell
of a psychologist." Under him, Lehman became the gentleman's banking house.
"The partners at Lehman were all men of stature," Felix Rohatyn, the banker who kept
New York City from the throes of bankruptcy in the 1970s, told Auletta. "They were
principals. You dealt with them as owners of a great house. You felt that if there was any
such thing as a business aristocracy, and at the same time a highly profitable venture, that
was it."
The firm's stellar reputation survived Bobbie's death in 1969. Many of its M&A bankers
in the 1970s and early 1980s are still famous, still the icons of their profession. Their
ranks included Eric Gleacher, Stephen A. Schwarzman, Peter Solomon, J. Tomlinson
"Tom" Hill, Robert Rubin, Roger Altman, and a young Steve Rattner; they all achieved
great success--and wealth--after leaving Lehman Brothers. It was infighting--typical in
the firm's last half-century--that brought Lehman low enough to be bought by Shearson
American Express in 1983. And through that strange marriage ("Shearson taking over
Lehman is like McDonald's taking over ' 21,' " a Lehmanite told Bryan Burrough and
John Helyar for their 1990 book, Barbarians at the Gate), Lehman stewed. And schemed.
Its Lehman Commercial Paper Inc. (LCPI) unit grew to eclipse Shearson's own
department, and provided enough momentum for Lehman Brothers to finally spin out
once again, its egos intact.
As for Fuld and Gregory? It had taken immense grit, courage, and a warlike mentality to
restore the burnish to the once golden brand. They had defied the naysayers who believed
that a tiny bond shop would never survive the Mexican peso crisis of 1994; and they did
the same again through the Russian crisis of 1998. They had weathered rumor, had
survived scandal, and had even ousted their longtime colleague, T. Christopher Pettit, to
preside over a fully fledged global investment bank.
Since Lehman, in their hands, had gone public and had grown from 8,500 employees to
28,000, the stock price had risen by a factor of 16. The partners were all rich. In 2007,
Fuld was named CEO of the Year by Institutional Investor magazine in the Brokers and
Asset Managers category. The bank was once again competitive, once again a respected
force on Wall Street. They weren't now going to let it go down just because of an asset
and housing crisis. They had survived 9/11, when their three floors of offices in the
World Trade Center had been destroyed and their headquarters in the nearby World
Financial Center badly damaged. They'd been through far worse.
And so, on this evening, for the sake of the