Frederick Ehrman, a partner at Lehman Brothers, assumed leadership of the firm in 1969, the first non-family member to do so. The investment house suffered a decline in business aggravated by the oil crisis in 1973. That year, Peter Peterson, formerly chairman and CEO of Bell & Howell and Secretary of Commerce under President Nixon, took over as head of Lehman Brothers. His restructuring of the firm, including reducing the number of employees and expanding its financial services, resulted in record revenues. Under Peterson’s watch, Lehman Brothers merged with the investment bank Kuhn, Loeb & Co. in 1977, and the new concern took its place as the fourth-largest investment bank in the country.[13] Lehman Brothers, Kuhn, Loeb & Co. expanded its global financial markets, opening offices in Europe and Asia and serving in a financial advisory capacity in U.S. and foreign transactions. Mergers and acquisitions were also an area of heavy growth.

As the 1980s ushered in the rise of high-tech research and start-ups, Lehman Brothers, Kuhn, Loeb & Co. helped finance Cetus, an early biotech firm, as well as Intel, which created the first microprocessor. Advances in computer technology at this time brought about a culture of greater competitiveness in the investment banking business itself with the potential for increased algorithmic trading strategies, volume of business, and potential commissions. “Investment banking, which had historically built its reputation and size on long-standing business relationships, was becoming more of a transaction-by-transaction industry,” Mark. T. Williams notes in Uncontrolled Risk. [14] 

The 1980s and 1990s brought about a number of transitions and periods of upheavals at Lehman Brothers. Lew Glucksman, a partner at the firm since 1966 and formerly head of sales and trading, took over leadership from Peter Peterson in 1983.[15] Glucksman placed a greater emphasis on trading versus investment banking, causing tensions between the two divisions. The firm experienced a decline in profits coupled with a weakening economy. A year later, Shearson, the American Express securities division, bought Lehman Brothers to become Shearson Lehman/American Express. Glucksman left Lehman Brothers at that time and began his own consultancy company on Wall Street. 

In the 1990s, Lehman Brothers continued to expand internationally. When American Express divested it financial services in 1994, it spun off Lehman Brothers through a public stock offering, trading on the New York and Pacific stock exchanges, as Lehman Brothers Holdings, Inc. Richard “Dick” Fuld, who had overseen the trading division, took over as chairman and CEO in 1994. Fuld had started at Lehman Brothers as a summer intern in 1966, became a senior trader under Lew Glucksman, and then a partner in 1978. Known as a driven company man and nicknamed “the Gorilla” for his intensity, Fuld doubled the size of the organization.

The attack on the World Trade Center on September 11, 2001, which struck at the heart of Wall Street, forced Lehman Brothers to relocate its operations. Lehman employees worked in temporary sites in Jersey City and Manhattan until the firm moved it operations to its new headquarters at 745 Seventh Avenue in Midtown Manhattan. Despite the setback from 9/11, Fuld continued to expand the size and revenues of Lehman Brothers. The firm bought Neuberger Berman in 2003 and H. A. Schupf in 2007, assuming its place in the wealth and asset management business and offering advice to institutional clients and high-net-worth individuals. In 2003, the firm also bought The Crossroads Group, another private equity fund investment-management business.

The Commodities Futures Modernization Act, passed in December 2000, exempted derivatives (including mortgage-backed securities) from regulation by the Commodities Futures Trading Commission. Firms like Lehman Brothers began to invest heavily in derivatives in the form of subprime mortgages that yielded unprecedented profits. In the early 2000s, Lehman Brothers bought five mortgage lenders, including subprime lender BNC Mortgage and Aurora Loan Services, which specialized in Alt-A loans that required little documentation from borrowers. The firm’s loans in the subprime market jumped markedly, and by 2007, Lehman Brothers was the largest issuer of mortgage-backed securities among the country’s leading investment banks. With its revenues rising sharply since the mid-2000s, the firm posted record earnings of $4.2 billion in 2007, the year Lehman Brothers was ranked by Fortune Magazine as the #1 “Most Admired Securities Firm.”

From the early 2000s leading up to the financial crisis of 2008, however, Lehman Brothers’ high amount of borrowing in proportion to its assets and large portfolio of mortgage securities placed it in an increasingly vulnerable position. Large bonuses given to employees who achieved high returns (with no consequences if the firm did poorly) also contributed to a culture of rewarding risk.

In the early 2000s, Lehman Brothers established employee networks including the Lehman Brothers Asian Network, Lehman Brothers Gay and Lesbian Network, Lehman Employees of African Descent, the Latin American Council, and Women’s Initiatives Leading Lehman. Lehman Brothers Centre for Women in Business, created in 2006 as a joint partnership between Lehman Brothers and London Business School, focused on the study of women in business through the lens of academia, business, and policy. After 2008, it continued as the Centre for Women in Business at London Business School.