The Devil's Casino (5 page)

But Tucker didn’t give up, and after a week Chris relented enough to go to Chicago for an interview. He was hired, and six months later so was his brother, Rusty. The trio spent two years there, and more than tripled the productivity of the company; but they had a falling out with the owner, who they claimed cheated them on their compensation. They swore that they “would never work for a jerk again,” says Mary Anne.

They came home to Huntington in 1975. With help from Chris’s father, they purchased Finnegan’s Restaurant and Tap Room, the oldest bar-restaurant in town. On the wall they hung a picture of Fiver, the runt rabbit in Richard Adams’s epic allegory,
Watership Down
. They incorporated a company under the same name.

But the revenue from Finnegan’s was not enough to support three families. The Pettits were so hard up that Mary Anne was denied a Woolworth’s credit card that she needed to buy blinds for her bedroom. By 1977, the Pettits and their three children often ate whatever food Chris could bring home from the bar. Mary Anne was pregnant with her fourth child (Chris Jr.), but she was so worried about their finances that she didn’t tell her husband for the first few months, not wanting to burden him. “Chris, in high school, had been the most likely to succeed and now he couldn’t even afford to support his own children,” she recalls.

Then in January 1977, Jim Boshart, who had known Pettit since they were on rival high school basketball teams and had heard that he and Tucker were struggling, invited them to interview at Lehman Commercial Paper Inc. (
LCPI
). Pettit happily accepted the invitation, Tucker says. Both men had realized that Finnegan’s was not a growth business, and “We learned that there was a lot of money to be made on Wall Street.”

For their big interviews, both men bought new suits from a local department store, Abraham and Strauss—Tucker says the suits cost $49.99.

Later that month, they met with Paul Cohen, then a partner and the chief administrative officer for
LCPI
, and Morton Kurzrok, the chief administrative officer for equities, before having a brief meeting with Lew Glucksman.

At the start of Tucker’s interview, Cohen said, “New suit?”

Tucker blushed. Quietly, he said, “Yep.”

Cohen smiled. “You realize the price tag is still on it?”

Neither man impressed their interviewers hugely—mainly because of their lack of financial experience. For Boshart this was hugely embarrassing, but he insisted they’d be good hires.

“Okay, so pick one,” he was told. Boshart picked Pettit.

Pettit refused the job out of loyalty to his friend, but Tucker insisted that he accept it, so he did. Six months later Pettit had shown he was an invaluable hire, and Tucker got another interview. He showed up for this grilling wearing the same suit he’d bought for the first session. This time the tag was cut off. This time, he was hired.

What was it that Boshart had seen in the tall, earnest, brown-eyed Pettit and in the good-looking, fair-haired Tucker? “I just felt that they were extraordinarily high -quality people who had an element that Wall Street clearly lacked, which was a sense of how to build a team.”

Given his military background, the demands of a grueling Wall Street day weren’t much of a challenge for Pettit. Of all the Ponderosa Boys, he was the quickest to ascend Lehman’s ranks. In 1979 he was made head of sales in the San Francisco office. He moved his family to the West Coast without hesitation. But they weren’t there for long. By 1980 he was head of all sales in
LCPI
, and he made partner of Lehman Brothers Kuhn Loeb (
LBKL
) in 1981.

“I think because he was quite old when he started, he was in more of a hurry than the rest to succeed,” says Lara Pettit, 40, his eldest daughter. “So he got in earliest and he worked through lunch.”

Unlike Fuld, Pettit had a charisma that people still recall with awe. He was an excellent—and often inspirational—impromptu speaker. Unlike Pete Peterson, Lehman’s
CEO
, Pettit offered humble, practical advice. He often liked to remind colleagues of how John F. Kennedy had once bumped into a janitor cleaning the floors of NASA’s vast corridors. “What are you doing?”
JFK
had asked the janitor. “Mr. President, I am helping put a man on the moon,” the janitor had replied. Pettit said he wanted every person at Lehman to have that janitor’s spirit. Every man and woman had his or her part in the firm’s business.

Bond salesman Craig Schiffer recalls that “Chris had an ability that I have never seen”—people often walked away inspired even after he had ripped into them. “He was particularly hard on me, kind of like a tough dad. He would beat the living crap out of you. Scream at you. But he’s the only person I’ve ever met who could do that to you, and you didn’t walk out of the room going, ‘What an asshole!’ You’d walk out of the room and think, ‘ I’ve gotta do a better job for that guy!’ ”

Pettit was blunt and honest with people, and revered for it. He also had a knack for spotting talent. Jim Vinci was an accountant for what was then Coopers & Lybrand and had been hired to update Lehman’s antiquated operational systems. He had a reputation for being mean, pig-headed, and tough--and knew it. He had never met Pettit when he was summoned to his office in the mid -1980s, when Pettit was Fuld’s number two.

“I was six months into my tenure there,” Vinci recalls. “He calls me into his office, and he says, ‘Jim? I’ve heard you’ re the biggest asshole we’ve ever hired.’

“I was thinking, ‘Okay, this is going to be a good meeting. . . . I think I can probably go back to my old job . . .’ And then Pettit says, ‘ But I’ve also heard that you’ re one of the brightest people we ‘ve ever hired.’ He added, ‘I came across your sort in the military. And so what I’ m going to do is save you. You’ re going to come work for me. ’” Vinci quickly morphed into Pettit’s chief of staff.

Pettit remained untainted—or so it seemed for many years—by his swelling paycheck. His four children all attended the same public school he had attended in Huntington. The moment he got home he’d rush to help them with their homework.

“We would have all the kids coming over—their parents would drive them over—because he was the only one who could figure out our chemistry homework,” says Lara. “And he’d be doing this at eight o’clock at night, right after he got back from work, trying to sit with a text book, figuring it out.” He rarely missed a game played by any of his children. “I remember him running to catch the last quarter, his tie flying behind him—he was late because he’d been caught in traffic on the way home from the office,” says Mary Anne. Once he arrived, everyone knew he was there because he shouted and cheered louder than any other parent.

On weekends he hung out with his family and with the Tuckers, the Lessings, and sometimes the Gregorys. Occasionally the Fulds, Dick and his beautiful blonde wife Kathy, came out from their apartment in the city. “Be on your best behavior, because my boss is coming,” he’d say to the children, who remembered liking Dick and Kathy Fuld. “She was so pretty,” says Lara.

Dick took photographs of them all sitting in the Pettits’ backyard with the children and their pets: two golden retrievers and two cats.

The romance of Dick and Kathy Fuld was by now part of Lehman lore. Kathleen Bailey, a statuesque blonde, the youngest of eight Catholic siblings, had been hired in the 1970s to work on the sales desk. Fuld had not wanted to hire her. “She’s too pretty—she’ ll distract someone and marry them and will be no use to the firm,” he had said.

He was partly right. “We all pretended not to notice that when Dick traveled for work Kathy would be going, too, but no one was fooled,” recalls Paul Newmark. They got married on September 24, 1978, the day after Fuld was made partner. Kathy converted to Judaism for her husband, and the couple had three children, Jacqueline and Chrissie, twins, and Richie. To the amusement of the Lehman staff, once they were married Dick called his wife “Fuld.”

Pettit’s simple lifestyle was a dramatic contrast to that of most of his Lehman peers, the majority of whom in the early 1980s were on LBKL’s banking side. They were men with last names like Gleacher, Altman, Rubin, Solomon, and Schwarzman. They were famous for their brains, their smooth talk, and their tough negotiating skills; but most of all they were guys who’d made money—lots of it (although
they
believed there was much more to be made, and in many cases, they were right). They had multiple houses, large domestic staffs, and as they got richer, many of them traded in the first wife for a younger one.

Pettit took all this in and told Mary Anne, “I only want to do this for 10 years. I ‘m worried it will change me if I do it for longer than that.”

The Lehman partners in the early 1980s regularly ate lavish lunches, washed down with expensive wine and dirty martinis. There was a barber in-house, free cigars (for which the annual bill ran as high as $30,000), and fresh raspberries at the ready. “Lehman’s dining room, and its chef, was as fine as any restaurant in the world,” recalls Newmark. “It was hard to get a reservation. You had to come with a client. But if you were a partner, you could go up and eat every day. But this wasn’t just ‘Come up and grab a sandwich. ‘ This was a three-course, four-course [meal], the finest food, no expense spared, with cigars, with alcohol, with wine, and then you had Robert Lehman’s art collection up there, with Picassos and Rembrandts, and all that other good stuff. It was a fascinating place.”

Back then the traders in
LCPI
never really partook of that lifestyle. They wore belts; the bankers wore suspenders. When Pettit first arrived, he found the traders reading
Playboy
magazine at their desks during lunch, and as soon as he was in a position to impose his will and taste, he put an end to that. In this way, he was like Fuld, who had strict moral principles and believed in the sanctity of family values.

What Pettit also loved about
LCPI
in those early years was that his little unit always fought above its weight. Its profits were disproportionally high, and this was in large part due to the camaraderie of the people who worked there. This was what all of the Ponderosa Boys were proudest of.

Mary Anne says, “What they loved about Lehman was its insistence on
team, team, team
. ”

She recalls that during one
LCPI
Christmas dinner in the late 1980s, “Chris was recapping the year’s growth and success, and he looked around the room and 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 honor. We succeed in business because people can trust us.’”

He was seen as messianic, says Kim Sullivan, a secretary on the sales side. “I can remember when I first started working on the trading floor, and he brought me out one day—it was like my second day—and said, ‘ You’ re going to see a lot of things go on here. You ‘re going to see a lot of people make lots and lots of money. Just remember one thing. One day you’ ll be there, too. But remember how you started in your career. And don’t ever lose sight of who you are and where you came from. Because that is easy to do when we all make lots of money.’ ”

Sullivan recalls the day she found a trader in hysterical tears. “His daughter had been brought to the emergency room in Long Island, and the hospital used the wrong aspirator for her, and the poor thing went into a convulsion, and went into a coma. He had just been notified that he had used up all his health insurance. He was new to Wall Street; he had not made any money yet.”

“I told him, ‘ You’ve got to go talk to Chris.’ And he said, ‘I don’t know Chris.’ I said, ‘Well, you’ re going to know him in about five minutes.’”

Sullivan quickly briefed Pettit on the situation and recalls that he said, “Sure, I know him.” “Chris knew everybody’s name on the trading floor. He was amazing! And he brought this guy into his office. They talked for about a half an hour, and when the guy came out, he was all smiles. Chris had given him a bridge loan so he could get a house in New Jersey, so the child could be moved to a better hospital facility. The house was like a block away from the hospital, and Pettit made sure that Lehman took care of everything. There was no limit on our health coverage, because we were a self-insured company.

“The guy said to me, ‘Wow, this is really an incredible place! They actually care about you!’ ”

Pettit’s ethos so infused and inspired
LCPI
that a corporate video about the firm’s history referred to the period before his arrival as a chaotic, unenlightened time: “B.C.—Before Chris.”

The biggest and most fundamental change on Wall Street in

my career has been the migration of private and public ownership

to a place where private partnerships and publicly owned

firms determine their own capital, and where, to quote Vikram

Pandit, “the traders play with the house’s money.”

—Joseph R. Perella, chairman and
CEO
, Perella Weinberg Partners

P
eregrine “Perry” Moncreiffe, the younger son of Sir Rupert Iain Kay Moncreiffe of that Ilk, 11th Baronet, joined Lehman’s fixed income division in 1982. A tall, Scottish aristocrat (and Oxford rower), Moncreiffe was an affable, affluent anomaly on the New York trading floor. But he was also smart, extremely low -key, and charming.

He had been attracted to Lehman because of Lew Glucksman’s lack of pretension, which he considered a blast of fresh air in the stuffy confines of Wall Street. “I thought, ‘ This is the first guy I like because he’s a no-nonsense trader,’” says Moncreiffe. “There were no airs and graces with Lew, but he was so intelligent—like an old Russian general. He was always there working in his shirtsleeves, his tie loosened and collar open. When I first had lunch with him, we talked about Marx, and I thought, ‘
This
gentleman I can work for.’”

When Moncreiffe met with Pettit and Fuld for his interview, he told them, “Lew is fantastic!” and, imitating Glucksman’s slovenly manner, took a piece of Brie from the welcoming spread and put it on his tie. “I really like him, because he’s not smooth,” he said. “But he’s able to lead a large trading organization, so he has got to be good at what he does.”