Journalist Ken Auletta Gives Bankers the Business in Greed and Glory on Wall Street

updated 04/14/1986 AT 01:00 AM EST

originally published 04/14/1986 AT 01:00 AM EST

Author Ken Auletta left his weekend house for a Bridgehampton, Long Island coffee shop one spring Sunday in 1984 to look for a newspaper. What he found instead was news: Peter G. Peterson, holding court in one of the breakfast booths, was describing the Byzantine intrigues that had led first to his ouster as chairman of the Lehman Brothers investment bank and ultimately to the dissolution of the firm, an event once thought about as likely as a going-out-of-business sale at the U.S. Mint. Recalls Auletta, "It sounded like a delicious story."

Auletta was right. His new best-seller, Greed and Glory on Wall Street—The Fall of the House of Lehman (Random House, $19.95), reads like a Wall Street soap opera, providing a rare glimpse at how the other half—make that the other one-tenth of one percent—lives. A senior partner at Lehman made $3 million to $4 million in a good year. Yet the partners were not as rich as they wanted to be, and when Lehman's earnings plummeted amid the stock market slump of late 1983 and early 1984, they decided to get their money out of the firm. In a paroxysm of greed and/or panic, the partners sold out to Shearson/American Express, thus depriving 700 people of their jobs and ending the existence of a 134-year-old firm that had weathered the Civil War and the Great Depression but could not survive the Me-First capitalism of the 1980s.

Remarkably, in the era of the writer-as-star, Auletta, 42, tells the whole story without once mentioning himself. It's as though his typewriter lacks a capital "I". "I tend not to like the narcissism of writers who bare their chests and say 'Now I did this' and 'Now I went there,' " notes Auletta.

What he did do was talk to more than half of the firm's 77 partners and spend 50 hours interviewing Peterson (whom colleagues characterize as "condescending," "uncaring" and "vain"). He also spent 35 hours with the man who pushed Peterson out of Lehman, Lew Glucksman (described by his partners as "crude," "pushy" and "a slob"). Neither man is enthusiastic about the book. "There's a great deal of accuracy in it," admits Glucksman, "and a certain amount of inaccuracy." Peterson is less circumspect: "Mr. Auletta reduced a complicated business story to a simplistic morality play."

Ed Klein, the editor of the New York Times Magazine who assigned Auletta the 25,000-word story that grew into the book, stands by his writer. "He's dogged and totally responsible in his pursuit of a story. He has a great determination to get the last fact and make sure it's right."

Auletta needed all his determination to become a journalist in the first place. Back in 1970, having served as a bag-carrier, speechwriter and campaign strategist for Robert F. Kennedy and New York Democrat Howard Samuels, he had ascended to the executive directorship of New York City's Off-Track Betting Corporation. "He had a big office and a driver and was making a lot of money," remembers Auletta's best friend, syndicated political columnist Richard Reeves. "He walked away from it all." In 1974 Auletta took a job as a political columnist at the New York Post. He had been there two weeks when he wrote a column poking fun at supporters of then New York Governor Hugh Carey, and Post publisher Dorothy Schiff, a Carey partisan, fired him. "He had nothing at all," Reeves says. "These were no-paycheck-in-sight days."

Auletta soon won himself positions at the Village Voice and New York Magazine, but the day in 1977 that both were sold to press tycoon Rupert Murdoch, Auletta quit rather than work for a man he believes turns publications into political weapons. Since then, Auletta has been his own boss. Greed and Gloryls his fifth nonfiction book; all of his books have been notable for their scrupulous objectivity.

Auletta attributes his sense of fair play to the values instilled in him by his working-class parents, Pat Auletta and Nettie Tenenbaum, who ran a sporting goods store in Coney Island. (His widower father now rents out ice skates at a Coney Island rink.)

"I had two strong parents with a set of beliefs," he says. "I was told what was right and what was wrong. If I were sentenced to go back and do another book on some of those people at Lehman, I would not be happy, because I found too many of them—not all of them—thoughtless. They don't reflect on what it is they're doing. And the money tends to turn your head."

At the time he was forced out, Peterson was earning about $5 million a year. Peterson's wife, Sesame Street creator Joan Ganz Cooney, told Auletta it was Peterson's private hope that Lehman Brothers would be sold before he turned 60, "and we'd have no money worries." Auletta calculates that Peterson, now engaged in his own investment banking business, walked away from Lehman with $18 million.

"When Pete and Joan talked about money, I did not instinctively respond with sympathy," Auletta says. Yet he hasn't done badly himself, living in an eight-room apartment on Manhattan's East Side with his wife of nine years, literary agent Amanda "Binky" Urban (whose clients include Jay Mclnerney and J. Anthony Lukas) and their 3-year-old daughter, Kate.

For all his success Auletta has not forgotten his Coney Island roots. "I still think of myself as an outsider," he says, with a trace of a Brooklyn accent. "I don't think of myself as a guy who wants to be invited to dinner by Pete Peterson or Lew Glucksman."

He needn't worry about that. No invitations have been forthcoming.

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