Wasserstein had been an M&A Icarus in the '80s, stoking and feeding a generation's hunger for mergers and takeovers. He insisted he was unleashing shareholder value, but mostly he was just enriching his fellow bankers as he soared. When the media turned against him, when his deals produced companies soggy with debt and operationally doomed, he was consigned to history's dustbin along with "Bludhorn, Charles" and "DeLorean, John," businessmen who embodied an era and could not transcend it. Wasserstein was, according to GQ, "desperate to be connected again to a big, sexy deal; desperate to recapture some of the old reputation; desperate to be seen as a player still." The writer concluded, however, that "it's over for Bruce Wasserstein." That was in 1991.

Lazard today is thriving, a darling of Wall Street analysts. It ranked 11th in completed worldwide M&A transactions through the first three quarters of 2007, putting it solidly in the second tier of the banking hierarchy. It bought the middle-market investment bank Goldsmith Agio Helms so that it could do more deals involving firms with $100 million to $500 million market caps. It has strengthened its restructuring practice, which tends to produce countercyclically to the M&A market, and purchased or announced joint ventures with banks in Latin America, Australia, and Central Europe. This was all part of a master plan Wasserstein happily takes credit for. "You know," he laughs, "rebooting this place was probably a pretty good idea."

Part of that rebooting can be traced to the success of Lazard Asset Management, which was transformed when the firm went public two years ago. Lazard's hedge fund business had been crippled by the departure of the star money runner William von Mueffling, who took 75 percent of L.A.M.'s investments with him to his new hedge fund, Cantillon Capital Management. Additionally, L.A.M. was burdened by a compensation structure that guaranteed its co-chiefs, Norman Eig and Herb Gullquist, 30 percent of L.A.M.'s annual revenue.

Wasserstein took control of L.A.M. and replaced Gullquist and Eig with Ashish Bhutani, a former Salomon bond trader who had never run an asset-management shop. Bhutani introduced a more diverse product mix and made sure that L.A.M. was in regular contact with the consultants who advise the larger pension funds around the world. Bhutani also brought in more Friends of Bruce, including key hires in the Far East and New York, building L.A.M. into a $142 billion giant that is contributing nearly 40 percent of Lazard's annual revenue. In the first three quarters of 2007, Lazard earned $1.3 billion.

Still, Lazard's name—and Wasserstein's reputation—was made by pulling off high-profile deals, not meticulously managing the assets of pensioners, no matter how profitable that can be. Lazard had always been the haute banque d'affaires vis-à-vis the world, a firm whose image, realistically or not, was that it had the ear of C.E.O.'s and world leaders and could, when necessary, bring such great figures together in the same room. Wasserstein is quick to admit that what Lazard does best is give advice.