Too Big to Fail [12]
The blitz paid off: In the last hour of trading, Lehman’s stock made a U-turn: After falling nearly 50 percent earlier in the day, it closed down at only 19 percent, at $31.75. It was now at a four-and-half-year low, the gains of the boom years erased in a single day. But the executives were pleased with their efforts. Tomorrow they would release their earnings, and maybe that would keep the good momentum going. Callan would be walking investors through the report in a conference call, and she went back to Gregory’s office to rehearse her lines.
Exhausted, Fuld got into his car to head back home and get a good night’s sleep. Once again he found himself wishing that the renovations on the sixteen-room, full-floor apartment he and Kathy bought at 640 Park Avenue for $21 million were finished, but Kathy had decided to gut it. He settled into the backseat of the Mercedes, put down his BlackBerry, and enjoyed a few minutes of respite from the world.
No one would ever have voted Dick Fuld the most likely to rise to such levels on Wall Street.
As a freshman at the University of Colorado at Boulder in 1964, he seemed lost, struggling academically and unable to decide on a major. Looking for answers, he joined the Reserve Officers’ Training Corps, the college-based, officer-commissioning program.
One morning during ROTC training, the commanding officer, a university senior, lined up all the students in the huge university quadrangle for a routine inspection.
“Fuld, your shoes aren’t shined,” the officer barked.
“Yes they are, sir,” he began to answer. But before he could get the words out of his mouth, the officer stomped on Fuld’s left shoe and sullied it. He ordered Fuld to go back to the dorm and shine it, which he did without complaint. When Fuld returned, the officer then stepped on his right foot—and again sent him back to the dorm.
By the time Fuld returned, the officer had turned his attention to the next person in line, a diminutive student. He placed his heavy army-issue boot on the young man’s ankle and pressed hard, causing him to fall to the ground and cry out in pain. For good measure he thrust his knee in the boy’s face, breaking his eyeglasses.
Fuld didn’t know his classmate, but he had seen enough.
“Hey, asshole,” he said to the commanding officer. “Why don’t you pick on someone your own size?”
“Are you talking to me?” the senior asked, stepping up to within inches of Fuld’s face.
“Yes,” Fuld shot back without hesitation.
They soon came to blows, and in the end, both Fuld and the officer lay bloodied on the floor after other cadets had separated them. The eighteen year-old Fuld was promptly hauled in front of the head of the ROTC program at the university and informed that he was being expelled. “You got into a fight with your commanding officer,” an ROTC official told him. “That’s not behavior becoming of a cadet.”
“I understand that, sir, but I’d like you to hear my side of the story,” Fuld protested. “You have to understand what happened.”
“No, there’s only one side to the story. You got into a fight with your commanding officer. That’s all that matters. I can’t have you in the program.”
The ROTC was only the latest in a series of disappointments for Fuld, but it was also a sign that he was slowly coming into his own.
Richard Severin Fuld Jr. grew up in the wealthy suburb of Harrison in Westchester County, New York, where his family owned United Merchants & Manufacturers, a textile company whose annual revenue ultimately grew to $1 billion. United Merchants had been cofounded by his maternal grandfather, Jacob Schwab, in 1912 as the Cohn-Hall-Marx Company.
Because Fuld’s father didn’t want his son to go into the family business, Jacob Schwab, his grandfather, reached out to his longtime banking firm, a Wall Street outfit called Lehman Brothers, and secured his grandson a