Too Big to Fail [75]
Minutes later, she went to see Fuld. “I lost credibility with our investors and I think I have to step down,” she said, her voice quivering.
Again Fuld felt overwhelmed, the tears rising to his eyes. But he had been here before. He could go on. Left alone in his office, he started to put the new pieces in place. He called Jeff Weiss.
“I’m listening,” he told Weiss.
“Uh, okay,” Weiss replied, not entirely certain what Fuld was driving at.
“I’m listening,” Fuld repeated, as if to suggest that Weiss’s comments at lunch were being headed.
“Do I have to tell you how I feel about Bart McDade?” Weiss said, essentially endorsing him for Gregory’s job.
“No,” Fuld said, “you do not.”
That night, McGee was dining with a college friend at Maloney & Porcelli, a steak house on Fiftieth Street, when his mobile phone rang. It was Fuld. McGee stepped outside under the restaurant’s green awning to take the call.
“Okay. I just want you to know that I heard you,” Fuld said, “and I’ve got the ball.”
“What?” McGee asked.
Fuld didn’t answer.
“I may be a dumbass from Texas,” McGee said, “but can you be a bit more explicit?”
“I heard you,” Fuld said, “I’ve got the ball.”
He told McGee to be at a special executive committee board meeting the following morning at 8:00 sharp.
Now McGee understood.
On Thursday morning, Kerrie Cohen began receiving voice-mails from Charlie Gasparino at 6:00.
“Hey, Kerrie. You better call me back right now, because this is a problem…. [Y]ou guys specifically denied something that I heard, and now it sounds to me like it’s true. So you better call me back now! Now means now. I better not get scooped on this—you’re going to have a huge credibility problem, and so will Lehman. So call me now.” Twenty minutes later, he followed up: “I better get a call back from you before this hits the tape. I am not kidding!”
Cohen had in fact been called in at 5:30 a.m. to work with Scott Freidheim on drafting the press release announcing Gregory’s resignation and Callan’s decision to step down; Callan had worked a deal with Fuld to remain at the firm in another role. Though it was not detailed in the release, Gregory would also be staying on, allowed by Fuld to remain on the Lehman payroll as an out-of-the-way consultant, so that he could continue to qualify for his pension and deferred compensation. Gregory’s career was over, but his old friend never did quite pull the trigger on him. In the press statement, Fuld said of Gregory, “Joe has been my partner for thirty years and has been a driving force behind where we are today and what we have achieved as a firm. This has been one of the most difficult decisions either of us has ever had to make.”
Freidheim also helped prepare a note to the staff from Fuld. “Our credibility has eroded,” Fuld said. “The current market environment is forcing us to take a number of measures to regain the confidence of all our constituents.”
For a change, that morning, the newspapers had nothing new on Lehman.
When Fuld arrived in the office, Freidheim handed him a draft of the press release to review, and then they started the executive committee meeting. Fuld looked distraught.
“This is the hardest thing I’ve ever done,” he said as he went on to describe Gregory’s role as a friend and business partner. “Joe is taking one for the team.”
“I always said that if anyone should take a bullet, it should be me,” Gregory said, “Let’s not let this be wasted.”
As Fuld again looked as if he were about to well up, Gregory grabbed his hand and said quietly, “It’s okay.”
“Do you want to say anything?” Fuld asked Callan.
“No, no,” she replied, wiping away a tear.
Announcing that he planned to name Bart McDade as Gregory’s successor, Fuld said, “He’s the best operator we have.”
But this was no time to celebrate McDade’s appointment. As the meeting came to an end, Fuld gave Gregory one final, heartfelt hug, and then watched as he slowly left the conference room.
CHAPTER SEVEN
On the afternoon of June 11, Greg Fleming, the disarmingly youthful-looking