Who

The billionaire co-founder of the Blackstone Group, Schwarzman is one of the most powerful financiers on the planet and one of the 21st century's most unequivocal symbols of Wall Street greed.

Backstory

Raised near Philadelphia (his dad sold linens and drapes) Schwarzman attended Yale alongside George Bush—the two were dorm-mates and fellow members of the Skull and Bones society. Much like the president, Schwarzman didn't spend the bulk of his time in the library with a stack of books: The future financial mogul founded a ballet society on campus in an effort to meet girls. After attending Harvard Business School, Schwarzman joined Donaldson Lufkin & Jenrette, leaving soon to join Lehman Brothers, where he became part of a squad of bright young bankers in the M&A group. It was at Lehman that Schwarzman first worked with Pete Peterson: Schwarzman was a young, rising star of a partner and Peterson was the man in charge. Peterson was ushered out of the company in 1983, and in 1985 he teamed up with his young protégé to found Blackstone, with each man investing $200,000 to get the firm off the ground. ("Schwarz" is "black" in German. "Petra"—Peterson's original family name was Petropoulos—is "stone" in Greek.)

The first few years at Blackstone were slow going and the duo only closed their first buyout fund in 1989. But thanks to the model that Henry Kravis had so brilliantly established at KKR, Blackstone grew leaps and bounds and less than a decade after starting out, it had emerged as one of the most formidable private equity firms in the country. Schwarzman now serves as chairman and CEO of the firm, which has more than $100 billion under management and operates a variety of businesses, including a hedge fund, buyout fund, restructuring group, and real estate investment fund. The last year has been particularly fruitful for Schwarzman: Following Blackstone's IPO in June 2007, he became one of the 100 richest men in America.

Of note

Like its chief rival KKR (see below), Blackstone went on a buying spree up until the markets began to shudder in 2007. In 2006, Blackstone raised $15.6 billion to form a new fund—making it the largest such investment pool ever raised by a buyout shop—and Schwarzman and his team quickly set out to invest the war chest, winning auctions to acquire Cendant's travel distribution business ($4 billion); Michaels Stores ($6 billion); Hilton Hotels ($26 billion); VNU ($12.7 billion); the Tussauds Group ($1.5 billion); and Freescale Semiconductor ($17 billion). Schwarzman's biggest deal, though, was the $39 billion purchase of Sam Zell's Equity Office Properties Trust: Beating out Steve Roth of Vornado, the buyout set the private equity world ablaze and smashed the previous buyout record, the $31 billion RJR-Nabisco deal executed by Henry Kravis in 1989. (Kravis has since reclaimed the record with the acquisition of TXU. And Blackstone later resold more than $28 billion of the EOP buildings to pay down debt.)

But Schwarzman had an even bigger surprise in store when he revealed in early 2007 that his company was preparing to go public. In June 2007, Blackstone did just that, raising $4.13 billion as part of the offering. Schwarzman's timing turned out to be fortuitous: Just a few months after Blackstone's debut on the NYSE, many of its funds sustained substantial losses following the subprime mortgage crisis. It's been a rocky road since then amid the market turmoil: Blackstone's stock has been battered and the firm has been noticeably deal-shy, carrying out just one major LBO in recent months, the $1.2 billion takeover of the food distributor Performance Food Group Co. But Schwarzman is now busy trying to exploit current market conditions. In early 2008, he announced that Blackstone had raised $10.9 billion as part of a real estate fund, which will seek to take advantage of a drop in housing prices.

Keeping score

According to Forbes, Schwarzman was worth $6.4 billion in 2008, which makes him the 53rd richest person in America. He sold $449 million worth of stock in Blackstone's IPO, but retained a 24% ownership stake in the company, although given its lackluster stock price, it's safe to assume he'll be a bit poorer at the end of the year.

On the job

From the 31st floor of 345 Park Avenue, Schwarzman oversees some 800 employees. (When you account for the companies that Blackstone controls, it's a much vaster operation: More than 375,000 people work for companies in the Blackstone portfolio.) Co-founder Pete Peterson is semi-retired these days and serves as senior chairman. Schwarzman's right-hand is Hamilton "Tony" James, who is also his heir apparent. Other top dogs at the firm include vice chairman Tomilson Hill; Jonathan Gray, who orchestrated the EOP buyout and heads up Blackstone's real estate group; and Art Newman and Steve Zelin, who head up the restructuring group. A number of big names have passed through Blackstone's hallways over the years (quite a few of whom have left after clashes with Steve himself). The alumni list includes Henry Silverman, Larry Fink, Glenn Hutchins and Roger Altman.

In person

Whereas most private equity and hedge fund kingpins try to shirk publicity, Schwarzman seems to love the cameras as much as Paris Hilton. The billionaire financier famously posed for the cover of Fortune in March 2007 alongside the humble headline, "The New King of Wall Street." But it was his 60th birthday party in June 2007 that really turned heads. Schwarzman and his wife rented out the Park Avenue Armory and spent $3 million on a 500-guest extravaganza that featured star performers (Rod Stewart, Patti LaBelle), plenty of boldfaced guests (Lloyd Blankfein, Michael Bloomberg, Barry Diller, Donald Trump) and, at the center of the room, a giant portrait of himself. (Which, it turns out, usually hangs in his living room.) But his lavish ways made him look downright foolish a few weeks later when the Wall Street Journal visited him at his Palm Beach estate and revealed that the buyout king spends his weekends gobbling down $400 stone crabs and insists that his staff avoid wearing rubber-soled shoes lest the squeaking sounds they make impinge upon his poolside bliss.

Drama

Many moguls on Wall Street spend obscene amounts of money. They just don't talk about it. It isn't a question of modesty, of course: Private equity moguls have always sought to keep their fantastic earnings on the down-low in an effort to avoid scrutiny by legislators. That changed with Schwarzman, his insanely lavish birthday party, and the news of Blackstone's $4 billion offering. Following the revelation that Blackstone's partners wouldn't have to pay taxes on the money they earned from the offering, Washington lawmakers almost immediately began talking about changing the tax structure for private equity firms, news that wasn't much welcomed by Schwarzman's peers in the industry such as KKR's Henry Kravis, who blamed the Blackstone CEO for tempting fate. (Fortunately for Schwarzman and his cronies, Congress seems to have abandoned the plan.) While Kravis's distaste of Schwarzman was nothing new—their firms have been locked in competition for deals for years—animosity between the two men intensified in 2007 after Schwarzman failed to invite Kravis to his big birthday bash. Ever the grown-up, Schwarzman later confessed he was angry that Kravis had never invited him to his home for dinner.

Campaign trail

Schwarzman remains a close friend of the president and is a major Republican donor. In case there are any doubts, a photo of Schwarzman with his arm wrapped around his good pal rests on a priceless antique table in his living room.

Pet causes

Although Schwarzman had for years been feted at charity events around town, his non-profit donations had been noticeably modest until 2008 when he announced he was handing over $100 million to the New York Public Library. Naturally, the gift came with some strings: The main building on Fifth Avenue was renamed in his honor, although the library's president, Paul LeClerc, had to deal with gripes from the community board over the institution's plans to etch Schwarzman's name into the façade.

Personal

The diminutive billionaire (he's 5'6") has been married to Christine Hearst Schwarzman, a former lawyer, since 1995. It's his second marriage: He was previously married to Ellen Philips, a Harvard Business School classmate. Schwarzman has two kids with his first wife: Teddy, a Duke Law School grad, and Elizabeth ("Zibby"), a writer and the wife of Andrew Right, a Goldman Sachs managing director. For Christine, Schwarzman is her third husband: Her second marriage was to Austin Chilton Hearst, a grandson of the late William Randolph Hearst. Although the marriage didn't last long, she held on to the last name after the split.

Habitat

Schwarzman paid $30 million in 2000 for the 740 Park triplex formerly owned by Saul Steinberg and John D. Rockefeller. Said to contain the largest living room in Manhattan (where a $5 million Cy Twombly hangs above one of the 11 fireplaces), the 20,000-square-foot Peter Marino-designed apartment has 37 rooms, 43 closets, a gym, sauna, steam room, billiards room, and screening room. The servants' quarters alone comprise three bedrooms, two baths and a dining room. Schwarzman also owns Four Winds, a 13,000-square-foot Palm Beach mansion—built for E.F. Hutton in 1937—that stretches from the Intracoastal Waterway to the ocean. He also owns lavish homes in Jamaica and St. Tropez, and an estate in Water Mill that cost him $38 million several years ago. To reach his homes in Jamaica and St. Tropez, Schwarzman relies on his private jet. He takes the Blackstone's Sikorsky helicopter to get to the Hamptons for the weekend.