Glucksman had an us-versus-them mentality, and “them” included Lehman’s investment bankers. In those days, the traders would put their positions on five-by-seven-inch cards on a wall so that everyone could see what had been bought and sold. The color of the ink indicated which type of security it was. According to a senior person at
LCPI
, if ever the traders heard that Arthur Schulte, Lehman’s partner responsible for trading, was on his way over from One William Street (Lehman Brothers’ headquarters) to 9 Mill Lane (then the headquarters of
LCPI
), the cards were quickly pulled off the board. There were limits to the total value of their positions, and at midday those positions might be higher; essentially, they were hiding their volatility, how much risk they were taking on a daily basis.
When Arthur left, the cards went back up. “It was a game,” says Newmark, “that was ingrained in people. That’s how Glucksman ran his business.” It was a game that taught these traders they “had to hide the facts.” It was also a very profitable game. And Dick Fuld was good at it.
One anecdote starring him quickly turned into legend.
It was the 1970s. Fuld was an associate trader and needed a trade signed by Allan Kaplan, then a partner and banker in charge of the commitments committee, to move forward. He went to see Kaplan, who was on the phone and motioned for Fuld to wait outside.
Fuld came in anyway, and said, “I need you to sign something.” Kaplan again signaled for Fuld to wait for him outside.
Fuld did not budge. “I know, but I need you to sign this.”
Kaplan continued with his phone conversation and Fuld barked at him again. An irritated Kaplan got off the phone. Who was this annoying young guy? Didn’t he know you couldn’t just barge into an office on the banking floor, much less interrupt a phone call? Fuld explained he had a trade that needed Kaplan’s signature before he could make it.
Kaplan decided to teach the impudent trader a lesson in protocol.
He motioned toward his desk, strewn with paper. “You see all these piles on my desk? When they are gone, I will sign your paper.”
Fuld leaned across the desk and cleared it in one sweep. Papers flew across the office as Fuld said, “Now may I have your signature?”
Kaplan was astonished, but he signed. The legend of Dick Fuld—the gorilla—had begun.
By 1984 Fuld had just a few close friends on the trading floor. One was Glucksman. Another was James S. “Jim” Boshart
III
, a managing director, who had been hired in 1970 by Glucksman mostly because of his jump shot. Boshart was six feet five inches tall and a former Wake Forest University basketball star, and Glucksman badly wanted the
LCPI
team to win the Lehman basketball championship. (The team had lost its first four games before Boshart joined them, but then ran off 12 straight wins to win the Wall Street basketball league.) That Boshart, who would rise to be a partner and chief administrative officer (
CAO
) by 1983, had a superb gift for crunching numbers was a happy coincidence. When he’d joined, Glucksman had rushed across the trading floor to greet him. “I know who you are. I’ve read your resume. You’ re not qualified to work here.” He paused. “But I’ ll give you a contract for three months so you can play on the basketball team. It’s up to you if you make it work on the trading front.”
And Boshart had.
A joke went around Lehman after Boshart was hired that “if you could jump up and touch the ceiling you’d be hired.”
It was not surprising that Glucksman liked Chris Pettit, either. Pettit had joined the firm in 1977. As a former military man, Glucksman liked recruiting from the military. Pettit, with his commanding demeanor and distinguished military resume, was a natural fit.
Tucker, Gregory, and Lessing—all seen as “Pettit’s men”—benefited from Pettit’s rise even though Pettit had joined the firm long after Gregory. The son of a lithograph printer, Gregory had never imagined he would end up on Wall Street. He’d been recruited by a family friend way back in 1968, and he’d spent his summers there as an intern in his teens.
Steve Lessing was the youngest of the group. He joined in 1980.
They all watched in awe as Pettit, with zero financial background, shot up through LCPI’s ranks. Pettit was made head of
LCPI
sales in 1980 and partner in 1982. He was now essentially the deputy to Fuld, with whom he got on very well.
Newmark recalled that the partnership of Fuld and Pettit worked well in the early 1980s, particularly while Glucksman watched over both of them.
“It was the type of firm in the eighties that you thought couldn’t be any better. It was Glucksman, it was Fuld, it was Pettit, it was a team,” Newmark said. “Lehman Brothers in those days was a team. And the team worked together, and we were all successful. We all got paid.”
Tucker became Pettit’s deputy in sales while Lessing, a salesman, rose to be Tucker’s deputy; Gregory worked in mortgage securities in the 1970s and rose to become head of high-yield bonds and, in the 1990s, of fixed income.
Gregory was always considered to be bright, although also unusually impetuous and emotional for a banker. He was sometimes seen openly crying in the office, which he tried to hide, and sometimes seen losing his temper, which he didn’t attempt to hide. He was, in those days, very much a Pettit man, constantly mocking the more taciturn Fuld. “Joe used to be considered a loose cannon,” recalls Robert “Bob” Genirs, a partner during this period. He remembers Fuld in particular shaking his head at some of the things Gregory either said or did. “Dick confided in me at times that he was skeptical of Joe,” says Genirs.
Before work each weekday morning, the Ponderosa Boys would stop off at a gym in lower Manhattan, just a short walk from their office, and, alongside business competitors from Goldman Sachs (including its future
CEO
, Jon Corzine, and Robert Giordano, its co-chief economist), run on treadmills and lift weights. They took pride in being the first through the doors of that gym, and were often greeted with the
Bonanza
theme music as they walked in. Liz Neporent, who was a trainer at the gym, had coined the nickname for the bunch, and assigned each of them a character from the show. “Tommy was the good-looking one—
Adam
; Steve was
Hoss
, and Joe, for obvious reasons was
Little Joe
. ” She said Chris, “the leader . . . always the first in, was
Pa
. ”
Neporent came up with the idea because Lessing, the chubbiest of the group, was always the most reluctant to “do what he was told” when it came to personal fitness. While the others ran and lifted competitively, pushing each other, Lessing was often strolling on the treadmill. Occasionally, though, he’d crank it up to full speed for about a minute and yell, “Come on!” as he ran and “Yee-haw! Yee-haw!”
Those screams were what gave Neporent her
Bonanza
theme: It sounded as if he was rounding up cattle.
Neporent remembers that the four men were, by far, the most generous members of the gym. “Other bankers would give us a card with $20 in it for a holiday tip. These guys gave us thousands of dollars. They never knew it, but we really relied on their Christmas bonus to live. And sometimes if they called us out to their homes for a personal training session, they’d send a limo to pick us up. I remember stepping into this limo while my neighbors were gawping. No one else did anything like that for us.”
The Ponderosa Boys were driven, competitive risk takers, unafraid of peers with better resumes and sharper suits—and they were completely united. Between 1984 and 1995 they were the architects of what would become the new Lehman Brothers. Their tiny division fought for its life and grew into an investment bank whose values would reflect, for a short while, what those men dreamed of creating: a firm that encouraged a militaristic loyalty and a hardscrabble resourcefulness exemplified by the credo “The Trader Knows Best” and a selfless embrace of the “one firm” mantra.
In 1980, as they looked around Wall Street and saw the excesses of the era, Tucker and Pettit made a pledge to one another—they swore they would never turn into assholes if they made money.
They would be unique. They would be the good guys of Wall Street.
“Team,” “team,” “team” . . . I’ m not sure Chris Pettit uttered a sentence that didn’t mention the word.
—Ronald A. Gallatin, former Lehman partner
A
pickup basketball game delivered Chris Pettit from the Vietnam War. He had served nearly three of his required eight years of military service after graduating from West Point and hoped to eventually study medicine. He had received two bronze stars for valor while in Vietnam. He piloted a small motorboat for the Mobile Assistance Training Team, and his wife, Mary Anne Pettit, remembers his letters describing the fear he felt as he trolled up and down the river with the Vietcong watching from both banks. He believed he would die at any moment.
After six months in Vietnam, Pettit was ready to go home. His good friend and high school lacrosse rival, Lieutenant Ray Enners, had been killed in an ambush, and the futility of teaching military maneuvers to the South Vietnamese was wearing on him. He wanted to go back to Long Island, back to his wife.
In tenth grade, he’d started dating Mary Anne Mollico, a pretty, auburn-haired cheerleader and gymnast at Huntington High School, where Pettit had been a top athlete and scholar. They married six years later, in 1967. Though they were poor, Mary Anne regarded their marriage as a “fairy tale.” Chris was, it seemed to those who knew him then, a prince of a man. There was something about him, they recall, that held your attention—when he looked at you, it was as if he saw straight into your soul. He was a man other men and women instinctively followed.
Pettit had chosen West Point over Harvard because it offered a salary, and he knew his family needed the income. Additionally, Pettit wanted to play for the West Point lacrosse coach, James F. Adams, who was a legend in the sport. At West Point, Pettit was the academy’s leading scorer and team captain, and was twice named to the All-American team. He graduated with honors in 1967, the year General Westmoreland declared U.S. victory in Vietnam. After two and a half years of training at the Nike Hercules Missile Battery Site in Zweibrucken, Germany, Pettit was shipped off to Vietnam.
When Mary Anne received a telegram at their home in Huntington, New York, in May 1970, she assumed the worst. She and Chris had planned to spend his upcoming R&R together in Hawaii, and Mary Anne now feared that that wasn’t going to happen. Her hands shook as she opened the envelope, and read: “Captain Pettit has suffered a severe hematoma to his right thigh, and it ‘s traveling toward his heart. We have to Medevac him to Japan.”
It was only a bruise—a nasty bruise that felt as if he’d broken his femur, but still only a bruise. He’d caught a knee from another player while fighting for a loose basketball at district headquarters in Vietnam, and a week later was in Japan being diagnosed by Captain Marvel, a marvelously named Army doctor who assured him, “We’ ll fix you.”
But Pettit didn’t want to be fixed—at least, not in order to return to combat in a war he no longer believed in. He wanted out. According to Mary Anne, her husband—like so many other soldiers—had been traumatized by the war. A devout Roman Catholic (in the 1980s he would become a eucharistic minister in his local church, Lady Queen of Martyrs), he’d had serious philosophical issues with what he and the U.S. military were doing in Vietnam. He’d had especial difficulty with carrying out his assigned task of teaching the Vietnamese how to fight once he realized that they didn’t want to learn. They’d rather die.
Captain Marvel was surprised when Pettit told him that he didn’t want to go back. “This is not going to be my career,” he said. Pettit was shipped to St. Albans Hospital, in Queens, New York, and he was there for six weeks, until the hematoma dissipated. He resigned his commission in June 1971.
Major Peter Bouton, his commanding office, wrote:
It is extremely unfortunate that this outstanding young officer will not continue to pursue an Army career, as he has the potential of surpassing the vast majority of his contemporaries in individual professional development.
Pettit still wanted to become a doctor. He had hoped that his outstanding high school record, his schooling at West Point, and his service in Vietnam would be enough to get him into a top medical school, but he was now 27, and couldn’t afford to pay his own way. He received rejection letter after rejection letter. According to Mary Anne, it crushed him.
“This was a man who was always the captain of every sports team,” she said later. “President of every class. He had never lost, never failed. It was a reality check.”
By now, Chris and Mary Anne had two daughters, Lara and Kari, and Chris needed to do whatever he could to pay the bills. The young family lived in his late grandmother’s house, which was owned by his father, a window salesman. Chris got hired to teach science and math to seventh and eighth graders at his old high school and coach the football team.
“When he came back [from the war] he was very troubled, and I found him crying so many nights, just sobbing, trying to understand the ludicrous business of war,” Mary Anne says.
He planned to write a book about his troubles, but didn’t get very far. He read Aristotle and Plato, and tried to make sense of his experience.
Pettit’s childhood best friend, Tom Tucker, had heard from his mother that Pettit was home, and having trouble. Tucker hadn’t seen Pettit for years, and was eager to reconnect with his old buddy. He invited Chris to join him in Chicago, where he was working with Greg Marotz, a Colgate University fraternity brother, in sales for the Northern Screw Company, a small importer and distributor of industrial fasteners used by farm implement manufacturers in the Midwest.
“When I called him in January 1973, he told me no—that Mary Anne was pregnant with their third child, Suzanne, and moving from Huntington was out of the question,” recalls Tucker.