Billionaire philanthropist was a power from Wall Street to Washington

Peter G. Peterson, the billionaire financier and philanthropist who combined a spectacular career in industry and Wall Street with public policymaking and dogged advocacy of government fiscal prudence, died Tuesday at his home in Manhattan. He was 91.

His family confirmed the death in a statement.

Peterson was one of the few captains of business whose reach extended into the public sphere. Forbes magazine described him as having “one of the most distinguished résumés in America.” He was secretary of commerce under President Richard M. Nixon, led government commissions and advisory bodies and for 22 years was chairman of the influential Council on Foreign Relations in New York, succeeding banker David Rockefeller, who died last year, also on March 20.

As a fiscal watchdog, he created a well-financed foundation that addresses a spectrum of fiscal issues and holds conferences that draw America’s top financial and political leaders.

He wrote a half-dozen books laying out his vision for economic prosperity while critiquing, and criticizing, entitlement spending, the Social Security system and the impact on the economy of partisan politics in Washington.

And in 1992 he joined Sen. Warren B. Rudman, R-N.H., and former Sen. Paul Tsongas, D-Mass., in founding the Concord Coalition, a bipartisan citizens group that sought to build a constituency for budgetary responsibility.

His career in business and finance gave weight to his voice in the national discourse. Starting out as a whiz kid in the advertising industry, Peterson, while still in his 30s, went on to head the Bell & Howell Corp., a Chicago maker of cameras and audiovisual equipment.

He made his biggest mark as the rescuer of the giant investment firm Lehman Bros., long before it went under in 2008 as the global financial crisis spread.

Then, in his late 50s, he launched a new career as a founder, with Stephen A. Schwarzman, of the Blackstone Group, which pioneered a new breed of financial engineer. Blackstone would become a major player on Wall Street and provide the means for Peterson, the son of a once-penniless immigrant, to earn a fortune. Forbes put his net worth this year at $2 billion.

Peter George Peterson — Pete to almost everyone who knew him — was born June 5, 1926, in Kearney, Nebraska, one of three children of George and Venetia Peterson, who had come from southern Greece. (An uncle had changed the family name from Petropoulos.) Peter’s younger sister, Elaine, was only a year old when she died of croup.

His father had arrived in the United States at 17, speaking no English and without any money. He took a job as a dishwasher for the Union Pacific Railroad, working, eating and sleeping in the caboose.

In 1923 the elder Peterson opened a Greek diner named the Central Café in Kearney, a small city in south-central Nebraska, and operated it for 25 years. Young Peter began working the cash register at age 8. He grew up in Kearney, nearsighted and colorblind. He graduated from Longfellow High School at the top of his class and won admission to the Massachusetts Institute of Technology.

At MIT he found he had no aptitude for engineering and shortly transferred to Northwestern University, from which he graduated summa cum laude in 1947.

CORPORATE CHIEF AT 34

Peterson began his business career at Market Facts, a Chicago research company. In 1951, he received an MBA from the University of Chicago Booth School of Business before returning to Market Facts as an executive vice president.

For a while, Peterson was a lecturer at the University of Chicago, where he encountered economists Milton Friedman and George J. Stigler, both of whom would win Nobel Prizes, as well as George P. Shultz, who was dean at the time. Shultz later held three Cabinet posts under Nixon and President Ronald Reagan and was instrumental in bringing Peterson to Washington.

McCann-Erickson, the large advertising agency, hired Peterson in 1953 as director of marketing services; a year later, at 27, he became a vice president. He eventually turned down the McCann-Erickson presidency to become executive vice president at Bell & Howell. There, under Charles H. Percy, later a senator from Illinois, he helped the company regain ground from its arch-competitor, Eastman Kodak.

At 34, Peterson was named president of Bell & Howell. (He recalled that when his mother witnessed the crush of photographers around him after he was named president, she asked him — calling him “Petey” — “Why put up with this craziness when you could go back to Kearney and own your own business?” She was referring to the family diner.)

Inexperienced in manufacturing, Peterson used neighbors and himself as guinea pigs for company products, helping to develop the zoom lens in the Bell & Howell camera that Abraham Zapruder used to film the assassination of President John F. Kennedy.

At 36 he was named chairman and chief executive, succeeding Percy. He held both positions until 1971.

Before then, in 1969, he had been recruited to be chairman of the Commission on Foundations and Private Philanthropy, a private body that was organized in response to populist attacks on philanthropies as parsimonious institutions that are mainly interested in self-perpetuation while enjoying favored tax status.

Years of marketing coups at Bell & Howell, including sponsorship of “CBS Reports” and other public-service television programming, brought Peterson to the attention of Nixon, who invited him to Washington. There he served as a presidential assistant on international economic affairs before becoming commerce secretary in 1972.

That job lasted only a year. Peterson was an outspoken liberal Republican who enjoyed socializing with journalists and Democrats, and when the Nixon White House began suspecting his loyalties he left town, concluding, he said, that he had not passed a White House loyalty test.

“My calves were so fat, I couldn’t click my heels,” he was quoted as telling friends. He later said he had been fired.

Peterson was soon peppered with two dozen job offers. He chose the chairmanship of Lehman Bros., seizing a long-deferred chance to work in finance.

‘THE REAL MONEY’

“I always wanted to get into Wall Street and do what I am doing now — invest,” he said in an interview for this obituary in 2007. “I was experienced enough to realize that the real money was made on investments rather than in selling your body by the hour.”

Lehman was flirting with bankruptcy, however, and Peterson encountered hard times as he set about restructuring the firm and drawing on his corporate contacts to win new business.

His turnaround efforts resulted in five straight years of record profits and a merger with Kuhn, Loeb.

After 11 years, however, a senior rival, Lewis L. Glucksman, with whom he had had a fruitful relationship as co-chairman, suddenly insisted on becoming the sole No. 1. Peterson decided to leave rather than fight a battle for control that he said he was told he could have won but at a high cost to the firm.

The episode was the subject of a 1986 book, “Greed and Glory on Wall Street,” by Ken Auletta.

In 1980, Peterson married Joan Ganz Cooney, the founder of the Children’s Television Workshop, producers of “Sesame Street.” She was his third wife and survives him. His first two marriages — to Dorothy Krengel (known as Kris) and Sally Hornbogen — ended in divorce.

Besides Cooney, Peterson is survived by five children from his second marriage, John, Jim, David, Holly and Michael Peterson; a brother, John; and nine grandchildren.

Peterson and Schwarzman, a Lehman managing director working on mergers and acquisitions, teamed up to create Blackstone in 1985, starting with nothing more than two assistants, $400,000 of their own capital and two Rolodexes.

Blackstone — the name was created by translating the first part of Schwarzman’s name from the German and Peterson’s name from the Greek — grew rapidly from a modest boutique to a world-class manager of more than $88 billion by the time it went public in 2007.

Although Peterson’s business career, particularly on Wall Street, often overshadowed his intense focus on public policy, he campaigned for decades to restore what he regarded as America’s lost fiscal integrity.

He was the founding president of the Concord Coalition and in 1994 was appointed by President Bill Clinton to a seat on the Bipartisan Commission on Entitlement and Tax Reform.

TARGETING BOTH PARTIES

In evident frustration with a lack of progress on these fronts, Peterson again tackled tax reform and government entitlements in 2004 by writing “Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It,” a best-selling, politically evenhanded indictment of Democrats for overspending and Republicans for excessive tax-cutting.

“I remain a Republican,” he told Businessweek that year, “but the Republicans have become a far more theological, faith-directed party, not troubling with evidence.”

He contended that the decision to index Social Security benefits for inflation and to increase those benefits substantially would come to be regarded as one of Washington’s biggest fiscal mistakes.

Peterson also wrote “Will America Grow Up Before It Grows Old: How the Coming Social Security Crisis Threatens You, Your Family and Your Country” (1996) and “Gray Dawn: How the Coming Age Wave Will Transform America — and the World” (1999), both dealing with the fiscal implications of aging societies.

He also wrote a memoir, “The Education of an American Dreamer: How a Son of Greek Immigrants Learned His Way From a Nebraska Diner to Washington, Wall Street and Beyond” (2009).

“I’ve always been involved with causes of various kinds,” Peterson said in the 2007 Times interview, “kind of a closet, second-rate intellectual, I guess you’d say — very analytical.”

He was chairman of the Federal Reserve Bank of New York from 2000 to 2004 and chairman of the Council on Foreign Relations from 1985 to 2007.

“It may well be that Pete’s most important contributions will not be in foreign policy but in his urging of sound fiscal policies,” said Alan Greenspan, the former head of the Federal Reserve, as Peterson stepped down from the New York chairmanship.

Peterson increasingly turned to philanthropy and fiscal advocacy in later years.

In 2006, his financial support transformed the Institute for International Economics into the Peterson Institute for International Economics. And after Blackstone went public in 2007, he created the Peter G. Peterson Foundation to raise public consciousness about long-term “politically untouchable” national challenges involving entitlements, foreign borrowing, health care costs, national savings, education, energy and nuclear proliferation.

One emphasis of the foundation has been to reach young people through the internet and social media. It also holds conferences that draw America’s top financial and political leaders.

In starting it, Peterson committed $1 billion and bequeathed much of his remaining estate to it.

“I’m in a business where you wonder how much enough is,” he said of his charitable motivation. “I know the meaning of enough.”