Too Big to Fail [74]
“No, no!” the bankers cried out. They certainly did not want his resignation; his departure would be a death knell for the firm. But the status quo could not continue; Fuld had to break out of the inner circle that was buffering him from the firm and get more involved with its operations.
Fuld was willing to accept that criticism. “I get that, that’s the feedback I’ve been getting,” he said. “I’m going to do it. I will do the right thing.” Still, he would not commit to firing Gregory.
“What are you going to say when you leave this meeting?” he asked the bankers.
“That the guy doesn’t get it,” said Weiss, laying it right out on the table.
“I got it,” Fuld replied.
As the bankers rose from the table and headed back to elevator bank, no one was quite certain what Fuld intended to do. It seemed unlikely that he was going to fire Gregory; nothing he’d said indicated that he was ready to take that drastic a step. Still, McGee and the bankers were relieved to have finally had an audience with Fuld and said their piece.
While that lunch had been going on, Gregory was stirring downstairs in his office. He knew the rumors—he could see the sentiment quickly building up against him. Fuld had made enough comments about the morale problem inside the building for him to understand that he was under fire. He wasn’t blind to the snippy comments and office rumor mill about him. Indeed, if there was one thing Gregory focused on—what he called “culture”—he could now see it fraying.
His own power, he knew, had started eroding months earlier. Fuld had increasingly leaned on Bart McDade, the firm’s head of equities and one of the most popular guys at the firm—honest, disciplined, and bright, maybe too much for his own good. Indeed, following Bear Stearns’s near-failure, Fuld had made McDade his de facto “risk guy.”
McDade had long been a fixed-income man, successfully running that division, only to be shunted over to the less profitable equities desk in 2005 in what many in the firm viewed as a classic Joe Gregory disposal of a potential rival. Or maybe, as others saw it, that decision had just been Joe being Joe, playing a hunch that a talent like McDade could be utilized wherever the need was greatest.
Though McDade was too polite to have ever said anything in front of the executive committee, he had spoken privately to Gregory about Gregory’s role at Lehman, making some not so subtle comments about “doing the right thing for the firm.” And while not as forceful as McGee, McDade had made it clear to Fuld that Gregory had lost his credibility, but by now that had become obvious to almost all the employees.
Minutes after Fuld returned to his office, Gregory came by.
“I think I should step down,” he said uncertainly.
“What’s going on here?” Fuld said, waving him away. “Go back in your office. I get 51 percent of the vote, and that’s not happening.”
Five minutes later, Fuld came to speak with Gregory, who was now talking to Russo, discussing what he had just told Fuld.
Gregory said that he was convinced the market wanted the firm to take action. “They want heads,” he insisted. “Heads have to roll. And it can’t be you,” Gregory told Fuld. “I have to do it.”
“It’s not your call,” Fuld told him. “This is a disease, every firm has it. It’s not your fault.”
Russo, who hadn’t said anything up until now, chimed in. “Dick, I think Joe’s right.” Under the circumstances, this was best for the firm.
As Fuld began to resign himself to what everyone had come to regard as inevitable, he fought back tears, muttering, “I don’t like it, I don’t like it, I don’t like it.”
Erin Callan was in her office when Gregory came in to break the news. He was leaving, he said, out of loyalty to the firm. And as her mentor, he had one last request: He asked her to step down as well, arguing that while his departure might affect morale internally, her brand name was the one that mattered to Wall Street. “We should do it together,” he said.
Though she had sent the e-mail to Fuld, Callan felt