The Devil's Casino by Vicky Ward Read Free Book Online Page B

Robert the Bruce, and Moncreiffe was descended from that line.
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    Moncreiffe had arrived back in New York just in time to watch Lew Glucksman plot his coup while Pete Peterson went on being “Mr. Outside,” the public face of the firm. Glucksman was fed up of being talked down to and treated like a second-class citizen who had to be tolerated. Peterson thought he was doing Glucksman a great favor by making him co- CEO in May 1983. Of course, Glucksman didn’t see it that way. Glucksman thought he deserved more.
    On July 13, 1983, Glucksman got to the office before Peterson, who was at a breakfast meeting, and, according to Ken Auletta, who chronicled the ouster of Peterson in
Greed and Glory on Wall Street
, began leaving “urgent” messages with Peterson’s executive assistant. When Peterson came in, he walked to Glucksman’s office, not expecting anything out of the ordinary. “I just thought it was one of our weekly meetings,” Peterson told Auletta.
    But Glucksman was tense, and Peterson asked him what was on his mind.
    “I’ve been giving a lot of thought to my life,” Glucksman said. “You know how important boats and cruising and ships are to me. Kind of in the same way I have satisfaction when I’ m in charge of a boat, I ‘m beginning to get the same feeling about Lehman.”
    He was unhappy in his role and thought his abilities were under-utilized, that he, unlike Peterson (a cultured New York intellectual and gadabout, who published essays in the
New York Review of Books
and counted Henry Kissinger as a friend), didn’t have any “alternatives.”
    “This is my whole life,” he said.
    “Lew, let me see if I understand what you ‘re saying,” said Peterson. “Are you saying you want to run the business alone?”
    Glucksman didn’t just agree with that summation; he told Peterson he wanted him gone by September 30. Everyone knew that Glucksman ran day-to-day operations of the firm, and Glucksman knew that he could count on the support of the board, if it came to a vote.
    On July 26, 1983, a special meeting of the board was called, and the directors arrived at 2 P.M. not having a clue what was going on. By the end of the afternoon, Peterson had ceded completely.
    Bob Genirs, a partner, recalls being summoned into the Lehman executive committee meeting where Glucksman made the announcement.
    “Lew and Pete stood together while Lew said that Pete was stepping down, and then, to our astonishment, he asked Pete to leave so that ‘I can talk to my partners,’” remembers Genirs. “I thought, as I watched Peterson’s face, ‘We haven’t heard the last of this.’”
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    After Glucksman ousted Peterson, the market nose-dived for a brief period. Unfortunately this happened at precisely the same moment Glucksman got long in the bond market—and the firm lost a ton of money Quite suddenly, Lehman was vulnerable. Unfortunately for Glucksman, this played into Peterson’s hands.
    Moncreiffe explains: “Peterson’s severance package contained a clause that stated that if Lehman was sold within a specified number of years, he would get an uplift on his equity—as would all the partners, most of whom were bankers, not traders. Most of the bankers had a vested interest in Lehman getting sold at any price. They thought if it doesn’t get sold, they’ re not going to get a premium on the equity that they’ve got in the business. He [Lew] will redistribute their shares to his constituency and they’ ll get taken out at asset value. It is an example, in a sense, of absolute power being perhaps a negative thing.”
    On May 11, 1984, Lehman Brothers Kuhn Loeb was absorbed into Shearson, a retail brokerage firm acquired in 1981 by American Express, for $360 million. American Express was then run by James D. Robinson III . It had luminaries like Kissinger, President Gerald Ford, and Vernon Jordan on its board. Shearson was the second-largest retail sales force in the country, run by Sanford I.