Lew Glucksman had spent a lifetime accumulating resentments. The son of middle-class Hungarian Jews, he constantly inveighed against the “Our Crowd” Jews in banking—symbolized in his mind by the Lehman family. He thought of them as WASP’s, not as fellow Jews. “All my life I resented it,” Glucksman says, referring to the bigotry that he felt kept a heel to the throat of East European Jews and other minorities on Wall Street. Vividly he remembers how one senior partner, decades earlier, advised him not to apply to join the Century Country Club in Westchester, an “Our Crowd” bastion. He can still recite the exact number of black-balls—seventeen—he once received when he tried to join the New York Athletic Club. “I didn’t know seventeen people there,” says Glucksman. The club historically discouraged Jewish membership, but Glucksman thought it would be a convenient place to swim each morning on his way downtown. Intent on reversing the rejection, Glucksman went to see then partner George Ball. The former Under Secretary of State in the Kennedy and Johnson Administrations and Ambassador to the United Nations in the Johnson Administration contacted his friend William Bernbach, a partner in the ad agency, Doyle Dane Bernbach, who knew the club’s membership chairman. Bernbach, who was not a member, tried to do a favor for Ball by looking into the matter. He reported back to Ball that Glucksman collected more blackballs than anyone else in the history of the club. Ball relayed this to Glucksman, who exploded. That night Glucksman telephoned Bernbach, whom he did not know, and screamed, “You were the kind of Jew who should have gone to the gas chambers!”* Why Glucksman should have blamed Bernbach, who was only an intermediary, suggests Glucksman’s mercurial temperament. Bernbach, a gentle, fragile man who passed away a few years ago, told Ball he had never had a more unpleasant conversation in his life.

In his mind, Glucksman linked those who blackballed him to those who tried to fire him from Lehman in 1973 when his trading department lost $7 million. When he was angry he sometimes compared these partners to Germans who looked away while Jews were deported in cattle cars. Although Peterson was the son of Greek immigrants and was raised in unpretentious Kearney, Nebraska, his ties to the establishment and his patronizing manner made him one of them in Glucksman’s eyes. He thought Peterson was too much the Washington “insider,” cultivating clients during expensive meals, networking relationships, dropping names, worrying about his own press notices and behaving as if investment banking still hinged on old-school relationships rather than market-responsive transactions. Peterson, in Glucksman’s view, still acted as if the SEC had not liberalized the rules under which corporations were financed and as if corporations had not hired their own skilled financial vice presidents, who nowadays often coolly selected investment banks on a deal-by-deal basis.

More and more, Glucksman knew, investment banking earnings depended on whether your firm, in competition with other firms, was selected to perform a specific function or transaction rather than carrying on a long-term relationship with a stable group of clients. Peterson called this “de-clienting the business.” The traditional banking business, which concentrated on advising corporations and underwriting, was being shoved aside by a host of “new products.” The institutional clients Glucksman had cultivated—the pension and mutual funds, insurance companies, powerhouses such as Citicorp, Bankers Trust, American Express, and the investment banks that traded huge blocks of stock—now dominated the stock market. Among them, they accounted for 90 percent of all trading volume on the Big Board.

Unavoidably, tensions arose between “traders” and “bankers,” two groups of people performing different functions. Essentially, a trader buys or sells securities—bonds, stocks, options, financial futures, commercial paper, certificates of deposit, Treasury bills, Eurobonds—either for clients, for which they collect a fee, or by gambling directly with the firm’s own money. The trader must make quick, firm decisions, often by consulting a jumble of numbers on a cathode-ray tube during and after hurried phone calls.

Bankers, on the other hand, usually have a longer horizon. A banker often invests several years in cultivating a relationship before it turns into a client. They earn fees for serving as financial consultants to corporations, for putting together new issues, for merging or divesting companies.

Glucksman knew Wall Street had changed. He knew that the giant firms and money managers who served as custodians of other people’s money now strove to prove that they could maximize the return on their investments. To do this they constantly shifted their funds, hedged their bets, sought immediate winners. Few invested in the long-term profitability of companies they believed in. In an atmosphere of uncertainty, of roaring inflation or fickle interest rates, hunches became king. Volatility, not stability, became the normal market environment—in 1983 alone, thirty billion shares or 60 percent of all outstanding stock changed hands. Among the traders who dominated the market, Lew Glucksman was one of the best.

To the traders he hired Glucksman often handed out free copies of Charles Mackay’s Extraordinary Popular Delusions and the Madness of Crowds, the classic study of mob psychology and the irrationality of markets.*

It gnawed at Glucksman that despite this rise of trading activity on the Street and at Lehman, despite the new importance of commercial paper and equities—trading and sales functions for which he had long been responsible at Lehman—he felt traders were still being treated shabbily. The old-line banking division at Lehman was producing a declining share of profits—only about a third of the firm’s profits in 1982 and 1983—yet bankers still held 60 percent of Lehman stock, still allowed the trading departments only thirty-five of the firm’s seventy-seven partnerships. And bankers still had their own man, Peter G. Peterson, on top.

Glucksman was not like them. He arrived at his desk before six, his wide tie already yanked down and to the side, like a noose, his jacket flung on a chair. Soon his pants would be sprinkled with cigar ash, his hands blackened by newsprint from ripping articles out of the Wall Street Journal, the New York Times and the New York Daily News to review with “my team,” as he liked to refer to his staff. He proudly wore an inexpensive Seiko watch with a shiny steel band, almost always ate lunch at his desk on the trading floor instead of in Lehman’s elegant forty-third-floor partners’ dining room. On his office walls were hung portraits of clipper ships, fish and a bright-red—“Chief Glucksman”—fireman’s hat. His office etiquette was democratic—he conversed with secretaries and clerks, and employees were free to drop in and see him. Instead of a windowed suite of offices overlooking the tip of Manhattan and New York harbor, as Peterson enjoyed, his private quarters off the trading floor were windowless and cramped, with seats for five people to squeeze around his fake green-leather-top desk. It was dubbed “the chart room” because Glucksman, who loves boating and fishing, had hung navigational charts of the Florida Keys on the walls.

On the trading floor, Glucksman was in the process of covering all the windows, so that the entire focus of the vast room would be turned inward, so that the hundreds of analysts and clerks huddled before their Telerate and Quotron screens would have nothing to distract them. Glucksman usually worked in a glass-walled office toward the center of the room known as “the fishbowl,” where his people could see him, feel his presence, watch him propel his five-foot, nine-inch body out of his glass office and around the trading floor, head down, shoulders slightly stooped, hear him bellow profanities—“Fucking-A-Well!” “Dipshit!”—watch his round face redden with rage, see him burst the buttons on his shirt or heave something in frustration, watch him suddenly hug or kiss employees to express appreciation.

“He’s a very mercurial, highly emotional man,” observes former Lehman board member George A. Wiegers, who left in the spring of 1983 to become a partner at Dillon, Read. While praising Glucksman’s talents, Wiegers also remembers how excitable he was: “Glucksman was a guy who once ripped the shirt off his back in a rage.” He sometimes rewarded or terminated employees whimsically. Another partner, who had been an ally, calls Lew “a slob. We always used to joke about whether Lew would get through a meal without spilling food on his suit.”

That is one dimension of Lew Glucksman. Another is offered by Florence Worrel, his former secretary, who recalls how he worried about the children of employees, and how he helped them get into private schools, offered personal loans, and once dispatched his driver to take her daughter to Harvard. Employees fondly remember how he would pause and laughingly instruct them how to use words like gelt or shmuck.

“There are so many facets to him,” says partner James S. Boshart III, who began as his clerk and became his administrative right arm. “He was a very tough man, a very emotional man, a very smart man, a very caring man. A lot of this talk of him being tough was an act. Once he was very upset because we had the trading floor built at 55 Water Street and someone put curtains in his office. In a rage, he pulled down the curtains rather than wait for the workers to come. He did it for a reason. He felt that the man who ran the trading floor should be feared. Lots of places have trading floors where people have a sense that the managers don’t know or don’t care what’s going on. They never felt that way about Lew Glucksman. His legendary temper was carefully cultivated. He did it because he wanted people to know there was someone to answer to. The real Lew Glucksman had difficulty telling people difficult things.”

The two dimensions of Lew Glucksman are put together by vice president Ralph L. Schlosstein, a capital-markets-group banker who worked on the trading floor and respected Glucksman: “Lew managed people the way Lyndon B. Johnson did—through a combination of fear and love.”

This combination, along with Glucksman’s shrewdness in anticipating the future flow of stocks and interest rates, forged a trading operation much envied on Wall Street. Of Glucksman, Peterson says, “Lew built commercial paper into an $18 to $20 billion business. Even his more ardent critics will tell you that he was one of the best in the business at credit analysis.”

In style or personality, Glucksman and Peterson were opposites. Peterson, with his thatch of jet-black hair, his clear-framed eyeglasses, deliberate manner, trim figure and deep voice, conveys authority. He is an earnest man, whose tie is rarely loosened. Although Peterson can display a dry, self-deprecating wit, particularly before an audience, he usually appears solemn. “Pete is a strange man,” observes a prominent businessman whom Peterson considers a friend. “We always see each other at various events. Yesterday we went to a cocktail party at Henry Grunwald’s [editor-in-chief of Time Inc.]. I saw Shirley MacLaine and walked over and congratulated her on her cover story in Time. We were chatting, and Pete walked over and started talking about the federal budget!”

Unlike Glucksman, Peterson immerses himself in public issues and the world outside. He is a leading catalyst behind efforts to slash the federal deficit, to spur greater savings and productivity, to cope with mounting Third World debt. He sits on the boards of six blue-chip corporations, is treasurer of the Council on Foreign Relations and serves as a trustee of the Japan Society and the Museum of Modern Art. On his office wall hung original paintings by Jasper Johns and Robert Motherwell, autographed pictures of former Soviet Premier Brezhnev, framed photographs of Peterson with former Presidents Nixon and Ford, with former Secretary of State Kissinger, with Nixon’s entire Cabinet, with Japanese Prime Minister Nakasone.

At the firm, Peterson was Mr. Outside; Glucksman was Mr. Inside. Peterson cared more about the public weal and status, Glucksman about power. Peterson accepted and enjoyed an ambassadorial role—with clients, with competitors, with government, with the press and public. And he had an extensive social life outside of Lehman. He enjoyed attending an art or theater opening, an elaborate East Side dinner party. His talented third wife, Joan Ganz Cooney, president and founder of the Children’s Television Workshop, which produces Sesame Street, had ushered him into New York’s literary world, where Peterson dined with writers, wrote articles for the New York Review of Books and was recruited to write a book about the roots of the federal deficit.

For all Peterson’s stature and worldly experience, there is an innocence about him. His view of New York, for instance, is still that of an impressionable, awestruck arrival from Nebraska for whom the city is a Liz Smith column crammed with the names of movers and shakers. When New York Magazine, in its year-end 1984 issue, asked a group of New Yorkers to describe what the city meant to them, Peterson replied, in full:

Living in New York is like living out a tale of many cities. Where else at breakfast can you run into the foreign policy elite like Henry Kissinger and Winston Lord having coffee with the minister of Pakistan, and where else at lunch can you, in one room, see the newscasters and book-makers like Tom Brokaw, Dan Rather, Bill Moyers, Jason Epstein, Bob Bernstein, and Mort Janklow, and—best of all and of increasing relevance to me—in a city that is not youth-adoring, where else in the evening are the brightest stars in the room such people as Brooke Astor, Bill Paley, Irene Selznick, Jacob Javits, and Mollie Parnis?

Glucksman’s life, on the other hand, rotated around Lehman. Those Glucksman considered his closest personal friends were usually those he did business with. Rarely did he see them outside the business day. He counts among “my closest friends” Terry M. Cone of Cleary, Gottlieb, Steen & Hamilton, one of two law firms that did the bulk of Lehman’s legal work. Yet Cone says he has never visited Glucksman’s apartment. They had numerous business dinners—“which constitutes social life for him,” Cone says. Unlike Pete and Joan Peterson, Lew and Inez Glucksman rarely entertained. In fact, they were no longer close to each other. She was a part-time editor for a publishing company and had been a full-time mother of two grown daughters. At the end of a long day, Lew Glucksman would often scoop up some memos or a tool catalogue so he could contemplate furniture to build or repair, and he would have his driver wait outside as he dined alone in a Chinatown restaurant. When he got away, it was usually for lonely pursuits—skippering one of his boats, fishing, cabinetry. He sits on only one corporate board—Revlon—and served on the New York University board and, until 1984, as a board member of the Port Authority of New York and New Jersey.

If Peterson is the prototype of a smooth corporate titan, the earthy, volatile Glucksman was the opposite—a “jungle fighter.” A fellow board member observes: “Glucksman’s flaw was that there was an angry pig inside the man. He wasn’t after money. He was after power, complete control.” But Glucksman didn’t perceive himself this way. What he dreamed of doing for Lehman was what Gustave Levy had done for Goldman, Sachs, or John Gutfreund had done for Salomon Brothers—build a muscular, modern investment bank.

Glucksman’s urge for power was fueled by resentments. He came to resent Peterson’s preference for memos rather than meetings; he often complained about the way Peterson kept people waiting while he juggled telephone calls, about the wall of secretaries guarding access to him, about his condescending manner. “Ride out to the airport with me, Lew,” he would command. Peterson, who always worried about his own weight, would say, “Meet my fat friend Lew.”

Peterson’s appeal owes more to his stature, his contacts, his considerable intelligence and the aggressive homework he does rather than to his charm or magnetism. His ability to recruit new business staggered even his detractors, like Lehman partner Henry R. Breck: “The leavings from Pete’s table were enough to run a good little investment bank.” But the attention Peterson lavished on clients was rarely turned toward his partners, much less to those who worked in the trenches. One of his Lehman admirers, partner Stephen Bershad, says, “He would set his mind on something and see nothing else. He would walk down the hall with a stack of letters and read the mail while going out to a meeting and write replies and just throw them over his shoulder, assuming someone would be there to pick it up.” He would call partners at odd hours, ask them to ride uptown in his chauffeured Oldsmobile, and then ignore them as he talked on the telephone or scanned a memorandum. “He can be described as ‘frank’ or as ‘cruel,’ depending on your point of view,” observes partner Robert S. Rubin, who thought him “cruel.”

Glucksman thought Peterson was self-centered, haughty, uncaring. “I knew the man ten years but I never had a personal conversation with him,” says Glucksman. In fact, the Equitable lunch reminded him of another incident. As if the bone were still stuck in his throat, Glucksman becomes livid when he recalls how Peterson treated him “like a flunky” at a mid-seventies meeting with client David Rockefeller at the Chase Manhattan Bank. Glucksman’s version of this meeting is that he and Lehman had just successfully completed a major financing for Chase and that he and Peterson walked alone to the meeting, Glucksman briefing him on the details along the way. They rode up the elevator together, stopping at the seventeenth floor. When they got to Rockefeller’s office, Peterson told him, “I want to go in alone.” Peterson’s version is that they both went in to Rockefeller’s office, conducted their meeting, and as they were leaving, the Chase chairman asked to have a private word with his friend, the chairman of Lehman. Peterson says he could hardly have refused.*

Whether Glucksman’s or Peterson’s version is correct is almost irrelevant. What is relevant is that this and other wounds still pained Lew Glucksman. It irritated him when Peterson said, as he still does, that “I didn’t have a detailed grasp of that part of our business that was increasingly important—trading, futures, brokerage, commodities.” This angered Glucksman because these trading functions were then generating two-thirds of Lehman’s profits. And now that trading was getting its day in the sun, he feared that Peterson was angling within a few years to sell the firm for a substantial premium over the current share price. Rumors to that effect circulated freely throughout Lehman, fueled by the open desire of many partners to sell and become instant millionaires, and by one pregnant fact: partners were required to begin selling back their stock when they reached age sixty. Since Peterson was then fifty-seven,† Glucksman believed the chairman secretly plotted to sell the firm before reaching that milestone. Glucksman, also fifty-seven, says he picked up hints to this effect, but never anything concrete.

Glucksman knew, and the partners knew, that for several years now he, not Pete Peterson, had been managing the day-to-day business, had chaired the operations committee, which Peterson did not even serve on. Meanwhile, Peterson focused on a core group of clients, on bringing in new business, on strategic planning and marketing. Ever since Glucksman was made chief operating officer in 1980, Peterson had been delegating more and more responsibility to him; by 1983, the chairman worked directly only with a handful of Lehman partners—Roger Altman on new business development, Stephen Schwarzman on corporate mergers, David Offensend* on corporate finance clients, Robert Brown on public finance, and vice president James W. Hood on all marketing and public relations. Despite his growing isolation from the board as well as the rank and file at Lehman, Peterson rightly believed it was he who set the strategic framework for the firm’s success and who acted as a rudder for Glucksman, an opinion shared by many partners, though not by Lew Glucksman. “Over the last five years, Peterson didn’t play an active role in the management of the business,” says Glucksman. “I brought him up to date. We played a charade with him”—pretending he was in charge. It annoyed Glucksman that to the outside world Peterson got all the credit for successes Glucksman came to feel were his. “I got sick and tired of Pete always saying the same thing,” says Glucksman. “Pete was a guy totally obsessed with the world hearing the name Pete Peterson.”

To Glucksman, the way he was treated at the equitable lunch was the final indignity. He returned to Lehman Brothers that afternoon in a rage. One of those he turned to was partner Jim Boshart, then thirty-eight, a native of suburban Rockville Centre, Long Island. The blond six foot five New Yorker had landed a basketball scholarship to Wake Forest University, where he starred as forward, averaging 14 points a game in his senior year. Upon graduation, Boshart was drafted into the Army, served two years, and was then hired by Glucksman in 1970, partly because Glucksman liked to recruit athletes and those with a military background, men who appreciated his “team” concept, and partly to improve the Lehman basketball team. The team went from zero wins and four losses when Boshart joined, to twelve wins and four losses at the end of the season. And in thirteen years, Boshart rose from clerk in the money market division to chief administrative officer of Lehman. In his various jobs at the firm, the lean, boyish-looking Boshart always worked directly with Lew Glucksman.

Jim Boshart was a staff man, and unlike his more aggressive partners, was a superb listener, an idealist—a “Boy Scout,” as one partner, with a mixture of disdain and admiration, referred to him. Over the years, Jim Boshart had become the surrogate son Glucksman never had. He also became a bridge between Glucksman and Peterson. Glucksman may have been exasperated by Peterson, but he was often guarded in expressing his true feelings to the chairman. To Peterson, Boshart was an informal channel, someone who could decipher and interpret how Glucksman actually felt, which was sometimes unclear. Peterson felt comfortable with this arrangement because he felt comfortable with Boshart’s modest, Jimmy Stewart wholesomeness, his decency. By Peterson’s count they met at least three times daily, usually to discuss anything from personnel, recruitment or administrative matters to Lew Glucksman’s mercurial moods. Sometimes Boshart would listen to monologues for hours. It did not appear to trouble the chairman that his main set of eyes and ears within Lehman belonged to a man more devoted to Glucksman than to him.

Boshart recalls what Glucksman said to him after the Equitable lunch: “He described the meeting and said he really felt he hadn’t been viewed with respect commensurate with his role in the organization.”

Glucksman was even blunter with fellow board member Robert S. Rubin, then fifty-one, his closest friend at Lehman from the time both had become partners in 1967; the man he called “my consigliere.” Rubin, like Glucksman, was reared in a middle-class Jewish household, and went to public schools in Brookline, Massachusetts. Although at Lehman he was a brooding loner, at Brookline High School he had captained the basketball team and was active in an assortment of extracurricular endeavors. In his senior year he was voted “Most Versatile” by his classmates. Rubin joined Lehman in 1958, after graduating with “highest distinction” from Yale, being selected a Baker Scholar while studying for an M.B.A. from the Harvard Graduate School of Business Administration, and serving three years in the Army. As a member of the banking department, Rubin had been singled out as a comer, a man who could one day preside over Lehman. He was elevated to the board of directors in 1972 and placed in charge of the banking division in the mid-seventies. “I thought Bob should have been president of the firm,” says former partner Michael Thomas. “I thought he had the character and the decisiveness. He certainly knew technically as much as anyone. He was really relaxed. Bob could take it or leave it. He didn’t have an iota of personal ambition.”

But things soured for Rubin at Lehman sometime during Peterson’s reign. Although he still served on the Lehman board and on the commitments committee, which decided which clients Lehman would do business with, and was co-chairman of the pricing committee, which determined the firm’s position in pricing securities before they were sold, his star had dimmed. Peterson had removed Rubin as head of banking in 1977, after Lehman merged with Kuhn Loeb. It was no secret that Rubin and Peterson detested each other. In 1977, Rubin moved from the banking division offices to a tiny office off the trading floor, where, aside from shepherding the important RCA account, his responsibilities were vague. He had no staff except for a secretary. His somewhat disheveled appearance—long black sideburns, a prominent, indented nose, and a high, domed forehead—may have contributed to the impression that he was a little odd. Nevertheless, partners—including Peterson—freely consulted Rubin on a range of issues, for his financial acumen was legendary. Around Lehman he was known as “the senior partner for judgment.” Like Glucksman, he was revered by some partners, hated by others. And he may have been drawn to Glucksman by a common feeling that they were outsiders.

So when Glucksman told “Ruby,” as he also called him, of the Equitable lunch, Rubin was sympathetic. He recalls Glucksman saying, “I couldn’t believe his performance at lunch. I’m not going to the next lunch … I’m going to talk to Pete. This can’t go on like this. Something’s got to change.” From Glucksman’s point of view, the timing for a confrontation was certainly propitious. With trading profits skyrocketing, he was at the apex of his power at Lehman. It was the moment to strike.

*Glucksman confirms the conversation.

*Published in 1932 by Farrar, Straus.

*David Rockefeller declined to be interviewed.

†All ages in the book are given for the time the events transpired.

*Offensend was a vice president, not a partner.