For years the resentments had been building. And now, at a luncheon at the Equitable Life Assurance Society on July 12, 1983, they began to erupt within Lewis L. Glucksman, the co-chief executive officer of Lehman Brothers Kuhn Loeb. That a short, rumpled man with the face of a Russian general, whose shirt pocket often bristled with pens, who wore garish ties and short socks that slipped to his ankles, who was disparaged by Wall Street bluebloods as a lowly “trader”—that he would try to oust Peter G. Peterson, his imperious co-chief executive officer and the chairman of the venerable investment banking house, astonished his partners at Lehman and all of Wall Street.

In contrast to the unpolished Glucksman, Pete Peterson possessed an imposing résumé: summa cum laude graduate from Northwestern University, president of Bell & Howell at thirty-four, Secretary of Commerce in the Nixon Administration, and the man credited with rescuing Lehman Brothers from collapse in 1973 when he assumed command and with having helped steer it to five consecutive profit-breaking years. Just eight weeks earlier, in what Peterson considered a magnanimous act, he had elevated the relatively unknown Glucksman to co-chief executive officer. Lehman partners applauded.

The fallout from the explosion triggered by this July luncheon lifted this story from the business pages to the front pages. Thirteen days later, Peterson would be forced out of Lehman. Within nine months, Wall Street’s oldest continuing investment banking partnership, a firm that had survived for one hundred and thirty-four years, would collapse under Lewis Glucksman’s stewardship and would be sold to Shearson/American Express.

At the time of the Equitable lunch, Lehman Brothers was more profitable than it had ever been in its long history, averaging $15 million a month in pre-tax and pre-bonus profits over the preceding twelve months. With capital of almost $250 million and equity of $175 million,* Lehman ranked as one of Wall Street’s powerhouse investment banking houses. Unlike dozens of old-line firms that had already succumbed to the pressures of consolidation that have been reshaping Wall Street—Blyth, Eastman, Dillon; Loeb Rhoades; Hayden Stone; Hornblower & Weeks; White, Weld; Kuhn Loeb, for example—Lehman had rebounded strongly from its travails of the early seventies. Business was so brisk that projections for fiscal 1983, which would end on September 30, once again promised to shatter all previous records.

The modern melodrama that resulted from this lunch is a many-sided tale. It is a story about the life and the death of Lehman Brothers, and one of irreconcilable conflict between two men. It is a story of a poisoned partnership; of cowardice, intrigue and deceit. It is a story of greed for money, power and glory. It is a reminder that human folly and foibles—not the bottom line of profits, not business acumen, not “scientific” management or the perfect marketing plans or execution—often determine the success or failure of an organization. In its broader implications, the fall of the House of Lehman opens a window onto the forces that are reshaping Wall Street and the American economic system.

*Capital is a larger number because it includes the firm’s subordinated debts, including debts to departed partners, who will be paid over a period of time.