Fuld didn’t know his classmate, but he had seen enough.
“Hey, asshole,” he said to the commanding officer. “Why don’t you pick on someone your own size?”
“Are you talking to me?” the senior asked, stepping up to within inches of Fuld’s face.
“Yes,” Fuld shot back without hesitation.
They soon came to blows, and in the end, both Fuld and the officer lay bloodied on the floor after other cadets had separated them. The eighteen-year-old Fuld was promptly hauled in front of the head of the ROTC program at the university and informed that he was being expelled. “You got into a fight with your commanding officer,” an ROTC official told him. “That’s not behavior becoming of a cadet.”
“I understand that, sir, but I’d like you to hear my side of the story,” Fuld protested. “You have to understand what happened.”
“No, there’s only one side to the story. You got into a fight with your commanding officer. That’s all that matters. I can’t have you in the program.”
The ROTC was only the latest in a series of disappointments for Fuld, but it was also a sign that he was slowly coming into his own.
Richard Severin Fuld Jr. grew up in the wealthy suburb of Harrison in Westchester County, New York, where his family owned United Merchants & Manufacturers, a textile company whose annual revenue ultimately grew to $1 billion. United Merchants had been co-founded by his maternal grandfather, Jacob Schwab, in 1912 as the Cohn-Hall-Marx Company.
Because Fuld’s father didn’t want his son to go into the family business, Jacob Schwab, his grandfather, reached out to his longtime banking firm, a Wall Street outfit called Lehman Brothers, and secured his grandson a part-time summer position in its tiny Denver trading outpost in the summer of 1966. It was a three-person office, and Fuld did the chores—he spent most of his day copying documents (and this was the pre-copy machine era) and running errands. But the job was a revelation. Fuld loved what he saw. On the trading floor men yelled and worked with an intensity that he had never experienced before. This is where I belong, he thought. Dick Fuld had found himself.
What attracted him was not the fulfillment of some lifelong dream about playing with other people’s money, but rather something far more visceral, something that instantly clicked. “I truly stumbled into investment banking,” he acknowledged years later. “Once I got exposed to it, I discovered that I actually understood it, and all the pieces fit.”
There was one person in the company, though, whom he didn’t really like: Lewis L. Glucksman, a rough-hewn, sloppily dressed muckety-muck from headquarters who occasionally dropped by the Denver office, intimidating and speaking gruffly to the crew. As keen as he was on landing a job in finance, Fuld swore he’d never work for this tyrant.
After graduating from college a semester late, in February 1969, he rejoined Lehman as a summer intern, this time working at the firm’s magnificent 1907 Italian Renaissance building at One William Street in the heart of Wall Street. He lived with his parents and commuted into the city. He worked on the desk that traded commercial paper—basically short-term IOUs used by companies to finance their day-to-day operations. For Fuld, the job was perfect except for one significant detaiclass="underline" He reported to Glucksman, who picked up rattling him right where he had left off in Denver.
Fuld didn’t mind all that much. He considered the job at Lehman temporary; he had eventually picked international business as his major at Colorado and was determined to get his MBA. Halfway through his summer internship, he walked up to Glucksman and asked if he would write a letter of recommendation for him.
“Why the fuck do you want to do that?” Glucksman growled. “People go to graduate school to get in a position to get a job. I’m offering you a job.”
Fuld, however, wanted to stick to his plan.
“We don’t get along,” Fuld shot back. “You scream at me.”
“Stay here and you won’t have to work for me,” Glucksman told him.
Fuld agreed to remain at Lehman as he pursued his degree from New York University at night. He continued doing menial tasks, one of which was operating the firm’s latest technology—a video camera. One day he was taping an interview with Glucksman, when in the middle of the recording session, Glucksman asked, “Who’s behind the camera?” Fuld poked his head out.
“What the hell are you doing?” he asked. “Come see me in my office first thing tomorrow morning.”
When Fuld appeared in his office the following day, Glucksman told him that it was ridiculous that he was doing “all this menial bullshit. Why don’t you just come work for me?”
“Do I get a raise?” asked Fuld.
The two became fast friends, and Fuld began his ascension at the firm. His salary was $6,000 a year, roughly 1/10,000 of what he’d take home as the firm’s CEO some three decades later. By the end of the year, he was able to move out of his parents’ house and rent a one-bedroom at 401 East Sixty-fifth Street for $250 a month. He drove to work in an orange Pontiac GTO, giving a lift to colleagues, including a young Roger C. Altman, who would later become the deputy Treasury secretary.
In Fuld, Glucksman saw himself as a young trader: “He didn’t let his emotions get the best of his judgment,” said Glucksman, who died in 2006. “Dick understood buys when they were buys and sells when they were sells. He was a natural.”
Every morning, as he walked onto the cramped trading floor, Fuld could feel his heart pounding with excitement. The noise. The swearing. Surviving by your wits alone. Trusting only your gut. He loved it all. As it happened, he had arrived at Lehman just as the firm was undergoing a major transformation that would benefit him enormously.
Since it was founded in 1850, Lehman Brothers has been a banker to an outsized share of twentieth-century business icons. Emanuel Lehman, who with his brothers, Henry and Mayer, emigrated from Bavaria in southern Germany just years earlier, had originally gone into business in Montgomery, Alabama, where they traded cotton, the country’s cash crop before the Civil War. Twenty years later the three brothers set up shop in Manhattan, where they helped establish the New York Cotton Exchange. In New York, Lehman quickly morphed from a trading house to an investment bank, helping finance start-ups such as Sears, Woolworth, Macy’s, and RCA. (The rough equivalent today would be the bank behind Apple, Google, Microsoft, and Intel, if such a bank existed.)
Fuld’s first year at the firm coincided with the death of its legendary senior partner, Emanuel’s grandson, Robert Lehman, who had seen it through the crash of 1929 and turned it into a financial powerhouse in post-Depression America. The aristocratic, Yale-educated Lehman had reigned during the firm’s glory years and was a banker to some of the biggest and most important U.S. corporations early in the American Century.
By the 1960s the firm’s advisory banking business was second only to that of Goldman Sachs. But because Robert Lehman and the other partners hated the fact that corporate clients would have to go to Goldman for their financing needs, Lehman decided to start its own commercial paper-trading operation, hiring Lewis Glucksman from the powerful Wall Street investment bank of A. G. Becker to run it.
When Fuld came on board, Glucksman’s trading operation was beginning to account for a majority of the profits at Lehman. The trading space was noisy and chaotic, with overflowing ashtrays, cups of tepid coffee, and papers piled on the tops of terminals and under the telephones. Glucksman had the windows blacked out in a bid to re-create a Las Vegas casino atmosphere, with traders focused only on the Quotron and Telerate machines that were standard-issue on Wall Street then. Phones were thrown; wastebaskets were kicked. And as in a Vegas casino, a miasma of cigarette smoke hung everywhere. It was a galaxy away from the genteel world of the bankers, but it was increasingly what Lehman Brothers was all about.