Review of THE LAST TYCOONS The Secret History of Lazard Frères & Co. By William D. Cohan
Some years ago, a New Yorker cartoon depicted a middle-aged, big-haired, overweight and badly dressed woman striding energetically down the street, with Manhattan’s skyline in the background. Her too-snug T-shirt displayed the large black initials “DKNJ.” The caption beneath read simply, “Donna Karan’s nightmare.”
A somewhat similar fate, to judge by William D. Cohan’s “Last Tycoons,” seems to have befallen Lazard Frères & Company. For more than a century, the legendary firm was considered by many in the clubby world of high finance the quintessence of investment banking, with its aristocratic European hauteur, superlative trans-Atlantic connections and unmatched savoir-faire in the advice it dispensed to ultra-wealthy individual and corporate clients. Although much smaller than better-known rivals like Goldman Sachs, Lazard engendered awe among Wall Street insiders.
Cohan, who once worked at Lazard, tells a sprawling, gossip-filled tale about the firm, the careful cultivation of its lustrous reputation and, in the last decade or so, that reputation’s apparent undoing. It is far from an epic tragedy — the story is, after all, about money and its most avid pursuers. Moreover, in dollar terms, Lazard — however dimmed its reputation — is seemingly thriving as never before, its stock price having doubled in the past two years.
But Cohan’s portrayal of the firm’s dominant partners — whose gargantuan appetites and mercurial habits provide the unifying force behind the book’s operatic melodramas — makes this an epic in its own way. In fact, “The Last Tycoons” bears a striking resemblance to F. Scott Fitzgerald’s “Last Tycoon.” Fitzgerald set his novel in Hollywood, and described lives, temperaments and ambitions that closely approximate those of Lazard’s most important figures. Of course, Cohan isn’t Fitzgerald. After 700 pages, many will come away feeling the bank’s story might work better as a tale told by Hollywood — a French-accented “Dynasty” meets “What Makes Sammy Run?”
In this book, the bank’s five most prominent modern-day partners — André Meyer, Felix Rohatyn, Michel David-Weill, Steven Rattner and Bruce Wasserstein — share tumultuous center stage. Because most Americans won’t recognize their names, Cohan meticulously details the impressive (but not entirely winning) reasons for their outsize reputations among denizens of Wall Street, the Upper East Side and the Hamptons.
Long the dominant force, André Meyer (who died in 1979) wasn’t a Lazard, but shared deep Alsatian Jewish roots with the family. Such connections mattered, as the firm’s birth and rise make clear. In the 1840s, three Lazard brothers left Alsace for New Orleans. Decamping soon thereafter for San Francisco — and joined by another brother and a cousin — they quickly made a fortune as dry goods merchants after the 1849 gold rush. By the 1880s, the Lazard clan had shrewdly used a small but profitable sideline — the shipping, trading and apparently early arbitraging of gold, silver and currency — to reinvent the family as trans-Atlantic bankers for an elite clientele, with offices in New York, London and Paris.
For the next half-century — thanks to rapid industrialization, global investing, expensive wars and profitable arms races — Lazard thrived as an adviser to corporations and governments, and at the expense of much larger, WASP-dominated competitors. The firm skirted bankruptcy more than once, but each time recovered stronger than ever.
New York became the most powerful and profitable of Lazard’s three branches, owing to Meyer’s courtship of Manhattan’s fast-rising Jewish Brahminate. The firm was also helped by his courtship, frequently amorous, of a succession of beautiful and beautifully connected society wives and widows — most famously, in his later years, Jacqueline Kennedy.
Meyer’s protégé Felix Rohatyn once said about his mentor: “He wanted to be loved. He had a great sense of buying and selling — things and people. He was the most ruthless realistic analyst of human character I have ever met. ... I fought him every day for 20 years. You had to. If you didn’t fight him, you were finished. ... He destroyed a lot of people.” Much of the book provides the evidence for that testimony.
Under Meyer’s tutelage, Rohatyn prospered, becoming the firm’s pre-eminent deal maker by engineering a string of high-profile corporate mergers and takeovers in the 1960s and early ’70s — while carefully never challenging Meyer’s need for total control. Rohatyn’s gifts were not unalloyed: he more than once worked at the darkly clouded intersection between politics and business — most notoriously involving Harold Geneen, ITT, Chile and Richard Nixon — and thereby badly tarnished his and the firm’s reputation for a time. But when New York nearly collapsed in the mid-’70s, the city called on Rohatyn to put its finances back in order. Manhattan and its powerful media adored him, transforming “Felix the Fixer” into a much-sought-after pundit and Democratic Party economic policy maven.
By the late ’70s, Meyer’s age and health required a successor — a position that Rohatyn declined and that instead fell to Michel David-Weill, whose family, along with Meyer’s, then still controlled Lazard. But his tenure soon brought challenges as contradictory and destructive as any bred under Meyer. The wave of corporate permutations and consolidations in the ’80s made Lazard ever more influential and profitable — and induced it to hire a talented new crop of bankers from comparatively middle-class backgrounds. Among these, Steven Rattner and Bruce Wasserstein would prove defining figures at the bank, for better and for worse.
Rattner, the son of a paint manufacturer from Long Island, went to Lazard after reporting for The New York Times, where he forged an important friendship with Arthur Sulzberger Jr., now the publisher. Assigned to the Washington bureau, Rattner, Cohan suggests, too eagerly befriended some of the city’s most influential deal makers, men who would eventually help him move on to investment banking.
Rattner’s Rolodex of media and political connections helped make millions upon millions for Lazard, his clients and himself as he midwifed some of the richest deals in the ’90s. His success resulted in a bitter rivalry with Rohatyn, but more important, it led David-Weill to make Rattner the deputy chief executive officer. Rattner soon let his new position overshadow that of David-Weill — an error Rohatyn had avoided with Meyer. David-Weill overthrew Rattner after he tried to restructure the New York, London and Paris offices in ways that threatened the Frenchman’s power. Rattner’s departure set the stage for the arrival of Bruce Wasserstein.
The Brooklyn-born son of a ribbon manufacturer, Wasserstein had briefly worked as a Nader’s Raider before turning to investment banking, where his brilliant but often very expensive deals earned him the nickname Bid-’Em-Up Bruce. Wasserstein is Lazard’s chief executive today because he outmaneuvered David-Weill, forcing Lazard from private partnership to public company. The shift destroyed the byzantine structure that had given Meyer and David-Weill their unrivaled control, but also brought unwanted scrutiny to the myriad struggles that had long been concealed behind the firm’s impeccably upright reputation. Yet ignominy aside, going public vastly enriched Wasserstein, the partners who joined him — and even David-Weill.
In many of its details, “The Last Tycoons” will captivate those closest to the industry. They will learn that David-Weill’s percentage of the firm’s profits was 25.7552 in 1977, that Lazard paid $100 million to settle a municipal bond kickback scandal, even which senior partner preferred the Hoyo de Monterrey Epicure No. 1 brand of illegal Cuban cigars. But for a general audience, there is little that will seem new after two decades of Enrons, Worldcoms and Milkens — all tales of similarly motivated men, the Masters of the Universe. We hear about the requisite amorous indiscretions (even a lurid S-and-M-tinged homicide), overconspicuous consumption, petty vanities and betrayals, and the habitual collecting of high-priced art and oversize homes.
Judging the art collection left by Meyer after his death, a writer remarked that it was “a glorious triumph of mystique over substance.” One is tempted to imagine that line as a caption for some future cartoon depicting a middle-aged, overweight and badly dressed banker, with Manhattan’s skyline in the background, dressed in a bespoke tab-collared, French-cuffed shirt with the monogrammed initials “LFNJ.”
<http://www.nytimes.com/2007/05/27/books/review/Parker-t.html?ref=review>
Carl
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