Germany just years earlier, had originally gone into business in Montgomery, Alabama, where they traded cotton, the country’s cash crop before the Civil War. Twenty years later the three brothers set up shop in Manhattan, where they helped establish the New York Cotton Exchange. In New York, Lehman quickly morphed from a trading house to an investment bank, helping finance start-ups such as Sears, Woolworth, Macy’s, and RCA. (The rough equivalent today would be the bank behind Apple, Google, Microsoft, and Intel, if such a bank existed.)
Fuld’s first year at the firm coincided with the death of its legendary senior partner, Emanuel’s grandson, Robert Lehman, who had seen it through the crash of 1929 and turned it into a financial powerhouse in post- Depression America. The aristocratic, Yale-educated Lehman had reigned during the firm’s glory years and was a banker to some of the biggest and most important U.S. corporations early in the American Century.
By the 1960s the firm’s advisory banking business was second only to that of Goldman Sachs. But because Robert Lehman and the other partners hated the fact that corporate clients would have to go to Goldman for their financing needs, Lehman decided to start its own commercial paper-trading operation, hiring Lewis Glucksman from the powerful Wall Street investment bank of A. G. Becker to run it.
When Fuld came on board, Glucksman’s trading operation was beginning to account for a majority of the profits at Lehman. The trading space was noisy and chaotic, with overflowing ashtrays, cups of tepid coffee, and papers piled on the tops of terminals and under the telephones. Glucksman had the windows blacked out in a bid to re- create a Las Vegas casino atmosphere, with traders focused only on the Quotron and Telerate machines that were standard-issue on Wall Street then. Phones were thrown; wastebaskets were kicked. And as in a Vegas casino, a miasma of cigarette smoke hung everywhere. It was a galaxy away from the genteel world of the bankers, but it was increasingly what Lehman Brothers was all about.
Although Fuld stands no more than five feet ten inches tall, he has an intimidating presence, a definite asset in the kill-or-be-killed environment that Glucksman fostered. He has jet-black hair and a broad, dramatically angular forehead that hoods dark, deep-set, almost morose eyes. A fitness buff and a weightlifter, Fuld looked like someone you didn’t want to take on in a fight, and he had the intensity to match. With his gaze fixed on the green early- generation computer screens in front of him, he would grunt out his trades in staccato, rapid-fire succession.
Within Lehman, Fuld earned a reputation as a single-minded trader who took guff from no one. One day he approached the desk of the floor’s supervisor, Allan S. Kaplan (who would later become Lehman’s vice chairman), to have him sign a trade, which was then a responsibility of supervisors. A round-faced man, cigar always in hand, Kaplan was on the phone when Fuld appeared and deliberately ignored him. Fuld hovered, furrowing his remarkable brow and waving his trade in the air, signaling loudly that he was ready for Kaplan to do his bidding.
Kaplan, cupping the receiver with his hand, turned to the young trader, exasperated. “You always think you’re the most important,” he exploded. “That nothing else matters but your trades. I’m not going to sign your fucking trades until every paper is off my desk!”
“You promise?” Fuld said, tauntingly.
“Yes,” Kaplan said. “Then I’ll get to it.”
Leaning over, Fuld swept his arm across Kaplan’s desk with a violent twist, sending dozens of papers flying across the office. Before some of them even landed, Fuld said, firmly but not loudly: “Will you sign it now?”
By this time, Fuld was known within the firm—and increasingly outside of it—as “The Gorilla,” a nickname he didn’t discourage. Years later, as the firm’s chief executive, he even kept a stuffed gorilla in his office, where it remained until Lehman had to evacuate its Lower Manhattan headquarters across the street from what had been the World Trade Center on September 11, 2001.
Several years after he started at Lehman, Fuld noticed a fresh face on the mortgage desk. While Fuld was dark and brooding, the new guy was pale and affable. He quickly introduced himself—a gesture Fuld appreciated— sticking out his hand in a manner that suggested a person comfortable in his own skin: “Hi, I’m Joe Gregory.” It was the start of an association that would endure for nearly four decades.
In terms of temperament, Gregory was Fuld’s opposite—more personable, perhaps, and less confrontational. He looked up to Fuld, who soon became his mentor.
One day Fuld, who even as CEO upbraided executives over how they dressed, took his friend aside and told him he was sartorially objectionable. For Fuld, there was one acceptable uniform: pressed dark suit, white shirt, and conservative tie. Glucksman, he explained, could get away with soup stains on his tie and untucked shirt tail, but neither of them was Glucksman. Gregory set off to Bloomingdale’s the following weekend for a wardrobe upgrade. “I was one of those people who didn’t want to disappoint Dick,” Gregory later told a friend.
Like Fuld, Gregory, a non-Ivy Leaguer who graduated from Hofstra University, had come to Lehman in the 1960s almost by accident. He had planned to become a high school history teacher, but after working a summer at Lehman as a messenger, he decided on a career in finance. By the 1980s Gregory and three other fast-track Lehman executives were commuting together from Huntington on the North Shore of Long Island. During the long early-morning ride, they discussed the trading strategies they’d try out on the floor that day. Within the firm the group was known as the “Huntington Mafia”: They arrived with a consensus. They often stayed around after work and played pickup basketball at the company’s gym.
Both Fuld and Gregory advanced quickly under Glucksman, who was himself a brilliant trader. Fuld was clearly Glucksman’s favorite. Each morning Fuld and James S. Boshart—another rising star—would sit around with Glucksman reading his copy of the
Glucksman’s unkemptness, they had come to realize, was a political badge of sorts, for Glucksman seethed with resentment at what he regarded as the privileges and pretenses of the Ivy League investment bankers at the firm. The battle between bankers and traders is the closest thing to class warfare on Wall Street. Investment banking was esteemed as an art, while trading was more like a sport, something that required skill, but not necessarily brains or creativity. Or so the thinking went. Traders had always been a notch lower in the pecking order, even when they started to drive revenue growth. The combative Glucksman encouraged this us-against-them mentality among his trading staff. “Fucking bankers!”was a constant refrain.
Once, Glucksman heard that Peter Lusk, a successful banker in Lehman’s Los Angeles office in the 1970s, had spent $368,000 to decorate his office with crystal chandeliers, wood-paneled walls, and a wet bar. Glucksman immediately got on a plane to the West Coast and went straight to Lusk ’s office, which was unoccupied when he showed up. Horrified by the decor, he rummaged around a secretary’s desk, found a piece of paper, scribbled a message in block letters, and taped it on the door: “YOU’RE FIRED!”
He didn’t leave it at that. Glucksman returned to the secretary’s desk, grabbed another piece of paper, and wrote an addendum to his previous message, taping it right below: “And you will pay Lehman Brothers back every cent you spent on this office.”
