Peterson enjoyed taking credit for what he thought was the transformation of Glucksman. Peterson, who just eight weeks earlier had elevated Lew Glucksman to the status of co-C.E.O., suggested Lew be invited as well. Carter, president and chief executive officer of the Equitable Life Assurance Society of the United States, the nation's third-largest life insurer, invited Pete Peterson, chairman and co-chief executive of Lehman Brothers, to lunch in a private room at Equitable's corporate headquarters 38 floors above the Avenue of the Americas and West 51st Street. What is lost is a connection to the past that stretched back 134 years and, like the persistence of daylight baseball at Wrigley Field in Chicago, rooted people to a set of shared traditions, a common memory. And it can probably be said with confidence that the merged firm will offer a broader array of investment banking services to its clients and that it might be managed more efficiently. That selling the firm seemed to be the only way to save it raises questions not only about the leadership of the new management team but also about whether private investment partnerships are destined to become dinosaurs.īusiness will go on, of course. Business was booming - partners were, by most standards, rich, and some senior partners were making almost $2 million a year in salary, bonus and dividends from their Lehman stock.Īnd yet, such is the volatility of Wall Street today that, in a matter of months, Lehman was hemorrhaging, losing money and partners. Hutton Loeb Rhoades Hayden Stone Hornblower & Weeks White, Weld Kuhn Loeb, for example - Lehman had rebounded strongly from its difficulties of the early 1970's. Unlike dozens of old-line firms that had already succumbed to the pressures of consolidation that had been reshaping Wall Street - W. With capital of almost $250 million, the firm ranked as one of Wall Street's largest investment banking houses, behind such names as Salomon Brothers Goldman, Sachs First Boston and Morgan Stanley. When Glucksman challenged Peterson, Lehman Brothers was more profitable than it had been at any point in its long history, averaging $15 million a month in pre-tax and pre-bonus profits over the preceding 12 months. In its broader implications, the fall of Lehman provides a window on the forces that are reshaping Wall Street and capitalism. What emerges is a modern melodrama, the tale of an irreconcilable conflict between two men, a story of cowardice and intrigue, of greed for money and power and glory. Descriptions of events have been confirmed by participants, including adversaries. Many internal Lehman documents and financial records were reviewed. It also represents extensive interviews with all the members of Lehman's board of directors, with 34 active or former partners, with numerous associates, with employees and people on and around Wall Street. It represents some 45 hours of interviews with Peterson and about 30 hours with Glucksman. This is the story of the fall of Lehman Brothers, pieced together over a period of 10 months. Glucksman and would be sold to Shearson/American Express, one of the great whales that now dominate Wall Street. Ten months later, Wall Street's oldest continuing investment banking partnership, a firm that had survived for 134 years (box, page 31), would fail to survive the reign of Lewis L. Thirteen days later, Peterson, a celebrated success story - president of Bell & Howell at the age of 34, Secretary of Commerce under President Nixon and the man who had helped rescue Lehman from collapse in 1973 - would be forced out of the firm he had helped steer to five consecutive record profit years. The luncheon took place on July 12, 1983, and the fallout from the explosion it triggered carried the story from the business pages to the front pages. at the venerable investment banking house, from his job. Lewis Glucksman, the co-chief executive officer of Lehman Brothers Kuhn Loeb, a short, rumpled man with the face of a Russian general, who was disparaged by Wall Street blue bloods as a lowly ''trader,'' Lew Glucksman would leave the lunch table determined to remove Peter G. FOR YEARS THE RESENTMENT HAD been building.
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