In 1984, Mr. Fuld was the head of the fixed-income division when Lehman, then a private partnership, was forced into the arms of American Express. Mr. Fuld’s mentor, Lewis Glucksman, was the chief executive at the time, and Mr. Fuld was one of the executives most opposed to the sale, and April 10, 1984 — the date of the sale — became what he would call the darkest day of his career.
In the 1980s, Mr. Fuld was viewed within the firm as a trader’s trader, with an athletic physique, intense focus and penchant for profanity. It would have been rare to see him smile, and he did not seem to be on the chief executive path, said Ken Auletta, the author of a book about Lehman’s downfall in the 1980s called “Greed and Glory on Wall Street.”
One colleague from the 1970s remembers a time that Mr. Fuld had told him to keep an eye on a co-worker. Mr. Fuld did not mince words, grabbing the colleague by the arms and saying, “If I ever see him walking the halls of this building and you’re not within 12 inches of him, you’re fired.”
Mr. Fuld stayed on at Lehman in the 1980s, even as others left. He viewed the sale as a betrayal, and tried lead a mass defection to join forces with another brokerage firm, to no avail.
In 1994, when Lehman Brothers was spun off from American Express, Mr. Fuld was at the helm.
Mr. Fuld had the support of Lehman’s workers, recalls Thomas Schick, an executive vice president at American Express.
“He has that one crucial element of leadership that is most important — that is the capacity to make people want to follow him,” Mr. Schick said.
In 1998, Lehman ran into trouble after the collapse of the hedge fund Long Term Capital Management. At that time, Mr. Fuld publicly blamed rumors for the company’s problems and complained to the Securities and Exchange Commission.
Lehman executives argue that that rumors are at the heart of the problem this time around. The firm’s ousted chief financial officer, Erin Callan, engaged in a high-profile tussle with the hedge fund manager David Einhorn this spring, when he publicly criticized the company.
Soon after, Mr. Fuld shuffled his management team, and Lehman gave out plastic swords to some employees, sending the message: go to battle. He gave a speech over the bank’s internal speaker system in June to rally the troops.
“Einhorn didn’t lose us $2.8 billion; we lost it,” Mr. Fuld said, referring to the hedge fund manager who has been shorting Lehman’s stock. He added: “Now let’s get out there and beat” them.
Friends and competitors say Mr. Fuld is still spoiling for a fight.
"He is as feisty as ever, but there is no question this is wearing on him as it would wear on anyone,” said John J. Mack, the chief executive of Morgan Stanley.