Power Struggle

The distress sale of Lehman Brothers to a subsidiary of American Express in May 1984 ended the independence of a private investment banking house that lad been in existence since 1850. The final reckoning yielded Lehman's 72 partners sums ranging from nearly $ 1 million for the most junior to $10 million-plus for the top echelon. This gilded dissolution followed months of infighting that had effectively deposed two chief executives of the firm. The first was a former Nixon Cabinet member with a Greek immigrant background but Wasp manners and connections; the other was a company insider who throughout his life, even at this Jewish-founded firm, believed himself a victim of anti-Semitism.

Viewed as a real-life Dynasty or Dallas, this tale of large egos in high places could make compelling reading. Ken Auletta, who first explored the story in a two-part article for the New York Times Magazine, contends that the events were also resonant of "how Wall Street and capitalism were changing." In fact, the author's chronicle of strife at Lehman Brothers is a good deal more persuasive than his tentative efforts to link an ugly power struggle to a supposed national preoccupation with quick results and a runaway trend toward bigness. The narrative is slow in starting, repetitive, and too often dotted with cliches and awkward syntax. It sorely lacks a detailed explanation of Lehman's management structure, and it is overburdened with irrelevant details such as whose dog was vomiting while key negotiations were under way. Still, the book's eventual energy is propulsive, and even at its weakest moments, Auletta's tale is buoyed along by the sheer venom of its gossip.

Peter Peterson, the Greek hash-house owner's son who rose to the presidency of Bell & Howell before he was 35, and Lewis Glucksman, the Manhattan lamp manufacturer's son who scrapped his way up through Lehman's unprestigious but increasingly profitable stock-and-bond-trading department, might have been born enemies. Peterson emerges as cold, almost oblivious to the people around him. A close associate who may have saved his life during a seizure recalls that Peterson never thanked him. Glucksman was mercurial, an "emotional volcano" in the phrase of a colleague, who might kiss or curse fellow employees but who almost never ignored them. Peterson represented the lordly tradition of "relationship banking," in which camaraderie with corporate clients was the firm's chief asset. On the strength of his status as former Secretary of Commerce, he arrived at Lehman in 1973 as vice chairman. Two months later he became the boss. Among his deputies was Glucksman, who for two decades battled the disdain of Lehman's investment bankers toward traders. He believed that relationship banking was finished, that profit would come primarily from trading and better marketing and that therefore his "team" should lead.

When Peterson, then 57, made Glucksman, also 57, his co-chief executive officer in May 1983, the move seemed a diplomatic acknowledgment that Glucksman's views were right. But Glucksman wanted total control and feared, rightly, that Peterson secretly hoped to sell Lehman at a premium before he reached age 60 and had to let the firm begin redeeming his shares. Glucksman sensed that Peterson had no stomach for a fight and would opt to be bought out. So, eight weeks after being promoted, he demanded that Peterson step aside.

The oddest thing about the coup d'etat was that the rest of the partners, who were not consulted, made no cry of protest when Peterson agreed to retire. Glucksman's imperium did not last long: within less than a year he too lost control, in part because the trading department's performance had turned sour, and an inner circle of partners pursued a sale, again without consulting their quiescent colleagues. The final deal with American Express took place in an atmosphere of numb resignation. Why? Auletta suggests that Lehman had lost the spirit of collegiality, that combat-weary partners cared only about rescuing their assets. Although he interviewed more than half of them, their willingness to let the House of Lehman fall remains the story's saddest and