By Ken Auletta
On a quiet July morning, one of many world's strongest and prestigious funding banking partnerships was once introduced at the route to ruin-not by way of the economic climate, now not through an act of God, yet by way of a self-inflicted wound.
The company used to be Lehman Brothers Kuhn Loeb, a respected Wall road establishment with roots that stretched again to the Civil struggle. And what occurred that July morning in 1983 wouldn't basically spell the tip of a banking company yet may come to represent the recklessly high-flying Wall highway of the 1980s.
Through hundreds and hundreds of hours of interviews, via entry to personal corporation files, during the self belief of board participants, companions, affiliates and staff, Ken Auletta created a prophetic spellbinder which resonates specially at the present time. it's a tale of greed, ego and blunder; a story of primal wrestle among males and among irrevocably diversified and antagonistic worlds; a very good instance of investigative journalism that competitors any best-selling novel for sheer shock, drama and pleasure.
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Extra resources for Greed and Glory on Wall Street: The Fall of the House of Lehman
What Glucksman and different companions remembered have been occasional lunches round the companions’ desk within the eating room at the forty-third flooring, the place Peterson might solicitously hearken to colleagues who stated bringing in an out of doors investor so as to add extra capital to the enterprise, whereas Glucksman strenuously objected. They knew that Peterson believed full-service funding financial institution resembling Lehman was once striving to develop into would wish extra capital to finance a broader diversity of purchaser providers and would have to take better dangers. Glucksman is seemingly right that money was once greatly at the brain of many companions. Peterson, for instance, concedes that via the spring of 1983 “the overwhelming majority of the partnership desired to promote the company. ” His personal brain, Peterson says, “was very open” on a sale; Glucksman’s brain used to be closed. past fears that the sale of the company may perhaps frustrate his constructing dream of 1 day operating Lehman Brothers by myself, Glucksman harbored different anxieties. He was once frightened to determine extra investors develop into companions and to extend their inventory possession. In 1982, for instance, of Lehman’s $122. eight million in gains, the buying and selling divisions produced $2 in revenue for each $1 produced by means of banking. but Glucksman knew that bankers then owned sixty seven percentage of the nearly 100,000 Lehman stocks; he knew that investors, whose departments contained such a lot of Lehman’s staff, boasted yet twenty-eight of the then seventy-nine companions; he knew that the administrative committee of the company used to be ruled via senior bankers, no longer investors; and he knew that as earnings soared so might the price of the companions’ inventory. Distribution of strength and wealth in the company was once unfairly skewed towards bankers, and Peterson, too, famous this, notwithstanding he differed with Glucksman approximately the best way to adjust it. As buying and selling earnings started to dwarf banking earnings starting in 1980, Glucksman started to press his companions to redistribute the firm’s wealth; at working committee conferences Richard Fuld, a protégé of Glucksman’s, who then ran the economic paper department, used to rant approximately “those fucking bankers” who hogged the wealth. those pressures got here to a head through the annual debate over bonuses and inventory in 1982. It was once various now from whilst Bobbie Lehman known as companions into his place of work and requested them what their possession proportion might be or on my own made up our minds how huge a percentage to furnish them. Now some of the departments made strategies to the working committee, which in flip made options to the administrative committee. the administrative committee, led by way of the chairman, selected the scale of every partner’s bonus; the board of administrators decided the best way to apportion stocks one of the companions. Glucksman, notwithstanding he used to be president of the complete enterprise, behaved like an suggest for the buying and selling divisions. He met with Peterson and advised what Peterson thought of a “radical plan” to redistribute the firm’s possession and bonuses. Glucksman believed partner’s present functionality, greater than his seniority or checklist in prior years, may still ensure the scale of his bonus.