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God, Country, Lehman

Wall Street is brimming with stories of cowboy CEO's who pulled firms from the brink of collapse.

Fuld led Lehman through at least three crises. Mack wrested control of Morgan Stanley after its merger with Dean Witter and pushed the firm headlong into risky trading businesses. Blankfein was part of the C-Suite coup at Goldman that brought the firm to public stock markets.

J. Pierpont Morgan locked bankers in his library to stem the Panic of 1907 and about 100 years later, JPMorgan (JPM - Get Report) CEO Jamie Dimon, faced with a similar circumstance, was the first among a handful of Wall Street CEO's to accept capital that the government wanted to inject in the nation's largest banks.

The bankruptcy of Lehman Brothers, however, repudiated the mythology surrounding titans like Fuld, Mack and Blankfein. Wall Street, having over-leveraged in the 2000s and grown to the point where firms were "too big to fail," is now clearly unsuitable for buccaneering types.

Lehman's failure set off a chain of events that precipitated the worst economic slump since the Great Depression and exposed fundamental flaws in the business models of major securities firms. Everyone on Wall Street would have been out of a job had the Federal Reserve and U.S. Treasury not sprung into unprecedented action and provided billions in bailout money and trillions in cheap liquidity.

Those bailouts spawned a stiff regulatory response, the full weight of which is yet to be seen. Already there has been a dramatic change in tone atop Wall Street.

Blankfein is one of just a few remaining CEOs ever to have manned a trading desk. Dimon, Wall Street's loudest voice, is mired in the fight of his career as he tries recover from a $6 billion trading loss and ward off criminal and regulatory inquiries hitting JPMorgan.

Morgan Stanley's Mack has been replaced by James Gorman, a wealth management expert, and the firm's earnings show it is de-emphasizing expensive trading businesses.

Vikram Pandit, a hedge fund manager who led Citigroup, was ousted in late 2012 in favor of an executive tasked with winding down the bank's non-core businesses. Bank of America is being run by a lawyer who is trying to work through over $40 billion in subprime mortgage losses. Robert Diamond, CEO of Barclays, left the firm in disgrace last year and has been replaced by a credit card banker.

Still, no captain of industry had a bigger cult of personality than Lehman's Fuld and nobody has seen a more complete rejection of their legacy. The Wall Street that Fuld reigned over until Lehman's last days no longer exists.

When Lehman was a scrappy Wall Street upstart, there was no reason it couldn't be led with the aggressive spirit that firms like Salomon Brothers and Drexel Burnham Lambert carried in a previous day.

When Lehman became one of largest banks in the U.S. with a $639 billion balance sheet and trillions of dollars worth of derivatives trades, "God, Country, Lehman" was an unacceptable way to approach a financial crisis.

Wall Street has and will continue to become more programmatic. Regulators, investors and media need to continue to focus on quantitative issues such as capital and liquidity over the personalities that once gave the industry its allure. New regulations, meanwhile, are constraining animal spirits.

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