Greed and Glory on Wall Street: The Fall of the House of Lehman

by Ken Auletta

Book Overview

The New York Times bestseller about the collapse of a major financial house and Wall Street institution, in paperback for the first time.

• Format: Hardcover
• Language: English
• ISBN: 0394544102
• ISBN13: 9780394544106
• Release Date: December 1986
• Publisher: Random House
• Length: 253 Pages
• Weight: 1.33 lbs.

Customer Reviews

One of my all time favorite books!

This book is one of my favorites. It's a classic soap opera. What Lehman Brothers was, their glory days, how egos and greed destroy companies. This is a brilliant study of humanity on Wall Street. Fast read and I strongly recommend to anyone who's thinking of getting into the business!

1970s Investment Banking had changed. 2008 derivatives exceed 500 trillion dollars, investments lev

1. 1983, Glucksman's primary interest was in preserving Lehman's independence and his own position of power, which he might best achieve by selling 50 percent or less of the business. Glucksman pushed Peterson out and trading represented 2/3 profits for Lehman. Market volatility characterized 1983, with thirty billion shares changing hands. Lehman was transforming from bankers holding 60 percent of stock to increasing percentage held by the traders. 90 percent of the stocks were traded by pensions, mutual funds, ContiGroup, Bankers trust, American Express, and investment banks. 2. Glucksman knew that Wall Street had changed. He knew that giant firms and money managers served as custodians of other peoples money and strove to maximize the return on their investment. Traders emerged to meet the demand. A trader buys and sells securities, bonds, options, stock, financial futures, commercial paper, certificates of deposit, treasury bills, and euro bonds for a fee or by gambling with the firms money. Make a market, buy, sell, and hedge, don't hesitate is the traders creed. 3. What kind of investment banking did Lehman want to be? Investment banking had changed. As the nation industrializes the most important element of corporate life is financing. Few of the inventor-entrepreneur class understood how to raise capital; they had limited access to financial institutions, investment banks for whom they could raise critical capital. Maturation of American Industry, new management class, and broad capital markets reversed the factors. Marketing and high technology operations replaced finance as the elements of major concern for CEOs. Lehman's traditionally high-margin products had been reduced to commodities where price and distribution were more important in selecting a banker than historic and social relationships. 4. Gustave Levy had made Goldman Sachs millions through the sell of commercial paper. Instead of borrowing money from a bank, corporations issued unsecured IOU loans, repayable in thirty days or more, for daily operations. Agents liked Lehman and Goldman Sachs collected a fee for placement of these IOUs with large investors. They also served an underwriting function , taking some of these accounts on their books to provide money for their clients. Underwriting means the agent inherit's the risk of default on their books, securing the loan, for their seller of the commercial paper and provide money to the buying client. 4. From Oct 1983 through Feb 1984 income totaled $7.1 million compared with $87 million a year earlier. Michael Schmertzler reported, "Management does not anticipate that the environment in which it is operating will necessarily improve this fiscal year. Indeed, trading and distribution losses could lead to consolidated losses in net income in certain months". By 1973, Lehman's commercial paper had reached $496 million in sales. This was the beginning of woe. Glucksman, like other traders had began playin

Oh! full of scorpions is my mind (Macbeth)

This is a classic tale of a company run into the ground because it had two CEOs and two different departments fighting one another for the juicy bonuses. Moreover, the CEOs had totally different characters and a completely different business vision. One was extrovert, overambitious, jealous, profoundly selfish, impulsive, volatile, dominated by lust for power, vindictive, an intriguer. The other was rather introvert, cold, too trusting, apersonal, a bad communicator, self-centered, rather an intellectual aristocrat. The introvert was ousted by the extrovert, who wanted to run his own show. The house of Lehman was divided in two different clans: the bankers who were rather fixed on medium and long term business with stable clients and the traders who were only fixed on the short term. While the introvert CEO could stand above both business divisions in the battle for the bonuses, the extrovert was himself a trader and was rather despised by the bankers. When the latter took the rein, key banking personal left the company. The traders wanted to cash in their shares as quickly as possible and the company was gobbled up by a third party. This story shows also that `human relations matter as much as the bottom-line.' A very worth-while read.

Lessons for many in high-pressure working relationships

This story of greed and glory is one that has been acted out in all types of businesses - large or small, service or product, new or old. It is a parable of overinflated egos, hyperpolitical environments and the inability of individuals to see their limits when blinded by the light of self-glorification. It is essential reading for anyone in a shared leadership role - partners, executives in tightly run corporations, etc. - and is most valuable for the lessons people should learn about themselves through Lehman's demise.

a rich treatment of an important financial event of the 80s

reads like a greek tragedy; rich treatment of the people involved in one of the most important, and most interesting, financial events of the 80s. ranks as one of the most finely crafted books of its type in business; it gives the reader a deep look inside a complicated world and shows us the role of interpersonal relationships in business decision making.