Cult Of Gold

The book lifts the lid on the extraordinary culture of a firm where an almost messianic belief in unity — motto: “one firm” — turned its New York offices into a sealed capsule that shut itself off from the rest of the world like a cult. It was a world where the desire to grow Lehman’s into a major player capable of taking on Wall Street giants such as Goldman Sachs became so all-consuming that few dared to challenge senior management decisions. Huge gambles were taken without a second thought. It was, Ward says, a world that was doomed to fail. “Even without an economic catastrophe Lehman would have failed. It was too dysfunctional.”

As part of the “one firm” strategy, which demanded total loyalty, Lehman invaded all aspects of its senior executives private lives and became oddly preoccupied with their marital status. Giving a toast at a company dinner one night, Chris Pettit, one of the two deputies to the Lehman chief executive Dick Fuld, said: “Now, look at this! Every single person here is with their original spouse. That is why we are successful. Because our word is our honour.”

Pettit later left his wife for a younger woman, which Ward believes broke his career. “His closest allies at the firm deserted him,” she says. These included Fuld’s other right-hand man Joe Gregory, who disliked Pettit’s new mistress and once told a colleague that she was “evil”. Pettit was eventually frozen out of Lehman in 1997 and died soon after in a snowmobile accident.

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But other wives found the social events sponsored by the firm and the annual summer retreat a ghastly ordeal, not least because of Fuld’s obsession with dress code. Evenings on the summer retreat required dresses, jewellery and Blahnik shoes, while they were all expected to don hiking gear for a trek up a mountain. One wife once brought a fake plaster cast so she could pretend she had a broken leg. She was flummoxed when Niki arrived with a real cast on her leg saying she planned to climb regardless.

Fuld’s requirement that his executives sacrifice all for the sake of the firm, often put unbearable strains on their families. Karin Jack recalls that her child had a seizure on the day the Jacks were supposed to go on a Lehman outing. Rather than excuse her for the day, they landed Joe Gregory’s private helicopter at her home and waited for her. “Can you imagine the pressure?” she told Ward. “I have this really sick child, but I know that if I don’t get on that helicopter it’s going to hurt Brad.”

Early on in his career, Pettit made a pledge never to “turn into an asshole” if he made money, something he sadly failed to live up to. Gregory turned into an all-controlling monster, Ward suggests, as he became obsessed with growing the firm and his own fortune. He turned out to be a phony, who bought his own helicopter and seaplane for his commute and would tell other senior executives that his personal annual spending budget was $15 million...

Pettit later left his wife for a younger woman, which Ward believes broke his career. “His closest allies at the firm deserted him,” she says. These included Fuld’s other right-hand man Joe Gregory, who disliked Pettit’s new mistress and once told a colleague that she was “evil”. Pettit was eventually frozen out of Lehman in 1997 and died soon after in a snowmobile accident.

Amid such a testosterone-charged atmosphere, it was not surprising that Lehman was a hard place for women to work. The one woman who rose to the top, Erin Callan, was a beneficiary of a passion Joe Gregory developed, relatively late in the day, at promoting diversity at Lehman. Callan, a Harvard graduate born to a New York cop, was a fighter. But she did herself no favours at Lehman, Ward says, by coming to work in low-cut, short dresses that would have been more suitable to a cocktail party. Callan’s looks were often the subject of morning inter-office e-mails, until she found herself struggling to hold her head above water when the markets started to turn. “Her biggest mistake was to accept a job [chief financial officer] she was not up to,” Ward says. “Joe Gregory had no business in appointing her.”