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management tried to have a good time, tried to forget about their troubles. They chatted,

they danced, they drank.

Gregory and Fuld slipped away early. This was not unusual--Fuld had never been much

of a party guy. He was famous for showing up at in-house cocktail parties for ten minutes

and then leaving to be with his family. "We' re going to be fine," Fuld told a stranger who

approached him just before he left the party. And if worse came to worst, he believed, the

U.S. government wouldn't let Lehman fail.

We're going to be fine.

Chapter 2

The Beginning

You had this senior group of guys; there was Dick, obviously,

but also the four guys in the carpool who started to run the

businesses: Joe, Tommy, Stevie and Chris. They ran Lehman. They were Lehman.

--Craig Schiffer, founding partner at Sevara Partners,

LLC, and former Global Head of Equity

Derivatives at Lehman Brothers

The five men who would forge the culture of the new Lehman Brothers, the post-

Shearson Lehman, could not have been more -A-different from the polished Lehman

partners of the 1970s. They were street fighters, traders who had no time for the

condescension of snobbish bankers who wore fancy suits but made less money than they

did.

Lehman's resurgence was led by Dick Fuld--and four men known as "the Ponderosa

Boys." This was a now badly outdated reference to Bonanza, the popular TV series in the

early 1960s about an intrepid rancher and his sons, each of them born to a different wife.

Lehman's Ponderosa Boys were T. Christopher "Chris" Pettit, Joseph M. "Joe" Gregory,

Thomas "Tommy" Tucker, and Stephen "Stevie" Lessing. Each morning at 5 A.M. they'd

meet at Lessing's house in Laurel Hollow, on Long Island's north shore, for the 45-minute

drive in to Wall Street.

They took turns driving. Chris was the tallest and oldest of the group, the clear leader.

Tommy was his sidekick and confidant--his blond, good-looking best friend since

kindergarten. Stevie was the youngest--and the chubbiest--but he exuded charm. He'd

married well and it showed. Joe was the wild card. A man as nervous as he was voluble,

lithe, with long hair, huge glasses, and rope bracelets, Joe looked completely out of place

on Wall Street, and in that carpool. He looked like he ought to have been in a rock band,

not a bank. He looked like Barry Gibb.

Dick Fuld was the son of upper-middle-class parents from Harrison, New York, a posh

bedroom community north of Manhattan. His father, Richard, ran a company that wrote

short-term loans for textile companies. Growing up, Richie, as he was known then,

wanted to go into the Air Force.

Betsy Schaper, a media publicist who grew up across the street from him, remembers that

he was doted on by his parents and was a local heartthrob. "Everyone wanted to date

Richie," she recalled. He was good-looking, straightforward, masculine.

Dick excelled in athletics at Wilbraham & Monson Academy, a boarding school in

Massachusetts--but otherwise left little impression on the faculty there. "If you'd asked

me back then, ' Is this a man with burning ambition?' I would have said absolutely not,"

said Schaper.

Fuld next studied at the University of Colorado, and his legacy there had nothing to do

with his efforts in the classroom. He stood out mostly for the reckless passion he brought

to parties, and for the fierce loyalty he showed his friends, and demanded in return.

Even then, he had grit, and didn't back down. There is an oft-repeated story of the time he

was expelled from his college Reserve Officers' Training Corps (ROTC). One officer

delighted in tormenting Fuld during weekly inspections about the shine on his shoes. This

officer would step on Fuld 's shoes and then send him back to his dorm to shine them

again. During one such inspection, Fuld returned from a second round of shoe polishing

to find the officer tormenting a fellow cadet in a similar fashion, even stomping on the

young man's foot until he dropped to the floor in pain.