Chapter One

Somebody at Bache & Company was out to get them. The lieutenants in the firm's tax shelter department just knew it. They recognized all the old tricks-the sudden audits of expense statements, the false whispers about misconduct, the unrealistic sales expectations. Probably, they guessed, this was the revenge of that skirt chaser, Bob Sherman. But their boss, Stephen Blank, disregarded the signs. A political war was under way, and Blank would not even arm himself.

It was the spring of 1979, and a quiet power struggle at Bache was coming to a head. Blank, a handsome, dark-haired thirty-three-year-old, won some dangerous enemies at the firm during his six years running the tax shelter department. His tough standards in selecting deals for Bache had stepped on the toes of the executives whose pet projects he rejected. When certain of his decision, Blank refused to yield in his judgment-he often told colleagues that reputations in the business were built not on the successful deals that were sold but on the flops that weren't.

Still, Blank surprised even some admirers when he refused to sell a real estate deal brought in by Sherman, who as the cohead of retail sales stood higher on the Bache corporate ladder. Sherman was a tough, demanding executive who did not like to be turned down. For Blank, the refusal was a fatal move, one that helped set in motion a series of decisions that reshaped the firm forever.


Steve Blank wound up running the tax shelter division at Bache almost by default. A former high school teacher, he backed his way onto Wall Street in 1970 as a consultant helping brokerage firms manage their paperwork. The timing was perfect-the back