House of Cards (38 page)

Lewis's personal life, always immensely complicated, had turned
into a complete mess. His best friend on Wall Street, Gus Levy, the senior partner of Goldman Sachs, suffered a stroke in October 1976 and died a month later. Around the same time, Lewis's longtime mistress, Valerie Dauphinot, committed suicide by taking an overdose of pills. Lewis found her body and read the note she left. The already very lonely man fell into further despair. “He was depressed long before she killed herself,” Sandy Lewis said, “but I don't think that helped any.” Another contributor to Lewis's ongoing melancholia was, according to his son, his realization that Alan Greenberg was the only partner at the firm who could succeed him. “Cy Lewis hated this guy,” Sandy Lewis said. “Greenberg was so cold my father used to say he pissed ice water.”

All of these events conspired together to make Lewis a broken man. What happened to Lewis was all of a piece with what was happening at other predominantly Jewish Wall Street firms after World War II. A force of nature—whether it was Cy Lewis at Bear Stearns, Gus Levy at Goldman Sachs, or André Meyer at Lazard—maneuvered to the top of a firm and succeeded beyond his wildest dreams. These men had everything they could have ever wanted. But in their successful climb, they lost the ability to help others get to the top. They wanted to be King of the Hill forever. “That doesn't work in nature and that doesn't work on Wall Street,” Sandy Lewis said. “So as they get weaker, they get tougher. On the way up, they gather friends, they gather momentum, and they gather power. But when they get to the top and they realize they can't go on forever, there is only one way to go, and that is down.”

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, 1978—a few days shy of the firm's fifty-fifth anniversary— the Bear Stearns partners met at the Harmonie Club for their annual dinner to celebrate another successful year. The dinner was also slated to be a retirement party for Lewis, who at age sixty-nine had come to realize that he no longer had the mental or physical energy to run the firm. For Lewis, the Harmonie Club was fraught with negative connotations. This was where a former flame's father had rejected him as the suitor for his daughter. In addition, years earlier the club had rejected him for membership. “Actually, the party setting had more to do with convenience than with any personal tribute to Lewis, who was hardly the main issue on the partners' minds,” Ehrlich and Rehfeld wrote. “For many partners, he was already part of their past—or more to the point, a tyrant whom they wished would leave quietly…. The close of that fiscal year had confirmed that earnings had slipped from the previous year. Reversing that trend was the primary issue for everyone at that party.”

During the brief ceremony to honor Lewis, John Slade recalled how
when he started at the firm, earning $15 a week, Lewis had been instrumental in his career advancement. Slade told his partners he owed “everything” to Lewis for helping to make him rich. His Park Avenue apartment was lined with works by Picasso, Miró, and Chagall. Slade then gave Lewis a gold Piaget watch specially ordered from Switzerland. “As he started unwrapping his gift, Lewis began to shake violently,” according to Ehrlich and Rehfeld. He had suffered a massive stroke. An ambulance rushed him to Mount Sinai Hospital, with his partners Teddy Low and Dick Fay by his side. (Some have suggested that one of Lewis's partners took his new Piaget watch.) Cy Lewis died two days later. “Dad died from the inside out,” Sandy Lewis said. “He did not want to live. The rest have died from the outside in. Few came honest. None leave honest.”

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ce Greenberg took over the running of Bear Stearns the day Lewis died. Greenberg's management style—very different from Lewis's—began to reveal itself in the months after Lewis's death through a series of memoranda, some decidedly tongue-in-cheek, he wrote to his partners. “Bear Stearns is moving forward at an accelerated rate and everybody is contributing,” Greenberg wrote in the first memo, dated October 5, 1978. “It is absolutely essential for us to be able to talk to our partners at all times. All of us are entitled to eat lunch, play golf and go on vacation. But, you must leave word with your secretary or associates where you can be reached at all times. Decisions have to be made and your input is important! I conducted a study of the 200 firms that have disappeared from Wall Street over the last few years, and I discovered that 62.349% went out of business because the important people did not leave word where they went when they left their desk if even for 10 minutes. That idiocy will not occur here.”

Six months after Lewis's death, on November 16, Teddy Low died at Lenox Hill Hospital. For Greenberg, the passing of both Lewis and Low in the same year was a seminal time in the firm's history because, as he once said, it was forced to not “do anything dumb.”

To Cayne, Cy Lewis's death was little more than a reminder that
Lewis had not fulfilled his promise to Cayne to put him on the firm's executive committee. Cayne blamed Greenberg for letting the matter slide. “Greenberg never had the balls to take him on,” Cayne said. He was determined not to let the Grim Reaper decide when and if he became the senior partner of Bear Stearns. When a socially acceptable amount of time had passed after Lewis's death, Cayne brought Greenberg back to the topic of becoming a member of the executive committee. “I get back in the car and I said to Greenberg, ‘You can't hide anymore under Lewis. It's your call. I expect to be on the executive committee.' He said, ‘Well, there's a problem with that.’” Cayne had figured out that several of his fellow senior partners, among them Marvin Davidson and John Rosenwald, didn't want him to be on the executive committee. Cayne told Greenberg: “Yeah, and I know who they are, and I know if they're not here, we're better off. I know they do dick. I know that they're worthless. If they're on the executive committee and you're telling me they have the ability to stop me, I'm at the wrong firm.”

“Well, what does that mean?” Greenberg replied.

“It means I'm at the wrong firm,” Cayne replied. Cayne prided himself on the veiled threat. He preferred to let the implication that he might leave the firm hang in the air like the smoke swirling from one of his ubiquitous imported cigars.

He also had thought a few moves ahead. Through a bridge connection and client, Cayne arranged for an interview at Goldman Sachs with the new senior partner, John Weinberg. After the interview Cayne called the client, who told him that Weinberg thought “it was the best interview he ever had” but “you're too hot to handle.”

Cayne told Greenberg that he'd had the interview with Weinberg, though he didn't let on how it had gone. “He knows that if I leave, the sales force leaves and a lot of bad things happen,” Cayne said. “So now I go and say to Greenberg, ‘It's D-Day.’” Greenberg told him what Cayne already suspected: that Davidson and Rosenwald were blocking his promotion and that Cayne had to win them over to get what he wanted. But, according to Cayne, Davidson knew “that I tried to shoot his ship down”— a reference to Cayne's effort to block Davidson's purchase of some New York City bonds in 1975—“and basically didn't talk to him because I knew he stole. I didn't have to talk to him. Managing partner of the firm means dick to me. I didn't take any orders from him. I had nothing to do with the guy.”

Cayne went to see Rosenwald and Davidson and had a blunt conversation. “Obviously, I've been requesting to become part of the executive committee because I deserve it,” he said to them. “They said, ‘Well, change
is good, and we're going to make an addition to the executive committee. We're going to announce inside of a week that Jerry Goldstein'”—who ran the retail branch network—'“is being added to the executive committee.' I said, ‘And that's it?' They said, ‘Yes.' I said, ‘Okay, so just so you understand how I feel. I don't really know how I'm going to react when I see that in writing. Have a good day.' And I got up to leave.”

About twenty minutes later Greenberg called Cayne. “I don't know what you said to these guys,” Greenberg told him. “But you're in.” He had succeeded in becoming a member of the firm's powerful executive committee just nine years after arriving at Bear Stearns with nothing more than some bridge contacts and a salesman's charm. Cayne credited the success of his gambit to the subtlety of his strategy with Davidson and Rosenwald. “Because when I said, ‘I didn't know how I was going to react,' I didn't threaten to quit,” he said. “I said, ‘I don't know how I'm going to handle that,' but there was no more conversation. I just left because they were telling me no.”

In short order, Cayne's partnership points were the same as Davidson's and Rosenwald's. Then Cayne was tied with just Rosenwald. Soon Davidson left; by 1982, Cayne said, he was the number two partner at the firm.

But his ambitions were still not slaked. To get to the top, he knew he would have to continue his artful and simultaneous cultivation of Greenberg as well as the other members of the executive committee. It was a delicate operation that Cayne performed with the precision of a brain surgeon. He continued to drive Greenberg to work every day; Cayne would occasionally break the painful silence of those trips to malign his partners to the boss while promoting himself. He also began to court the other leaders of the firm, or at least those whom he hadn't already alienated.

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time that his professional status morphed, Greenberg had been undergoing changes in his personal life as well. In 1975, he left his wife, Ann, after twenty-two years. (She later committed suicide by jumping out a window.) While his Fifth Avenue apartment remained filled with the French furniture she bought, he began to accumulate the talismans afforded him by his wealth, newfound bachelorhood, and frenetic hobbies. On one wall was the head of an antelope he'd shot in Africa using only a bow and arrow. He had a vast collection of books about magic, which he studied relentlessly to perfect his craft. He perfomed his magic tricks at dinner parties all over the Upper East Side of Manhattan. This most eligible bachelor, who looked something like a less ghoulish Uncle
Fester, was becoming the toast of the town. He dated many prominent women. “There was a certain guiless charm about him,” according to Ehrlich and Rehfeld. “Although he had a dry wit and seemed highly approachable, he was neither glib nor polished.”