Kansas to Wall St.
By NANCY J. PERRY

(FORTUNE Magazine) – In a world where there are no guarantees, you can bet on this: Life at L.F. % Rothschild, the Manhattan investment banking house, just isn't going to be the same under its new owner, Ernest Fleischer, 55, chairman of Franklin Savings Corp. of Ottawa, Kansas (pop. 11,000). Fleischer, a man so shy and unassuming that his parents once advised him to pursue a career that didn't involve people, keeps risks to a minimum. Rothschild lost $56 million in October mostly because of a $200 million unhedged arbitrage position. The new chairman's perspective on investment banking: ''We believe the role of the financial intermediary is a service role, like a grocer selling a loaf of bread. We make a small markup for providing that service.'' Ahem. Wall Street, say hello to Main Street, U.S.A. Different as it will be, at least there will be life for Rothschild. Weakened by internal dissension and huge trading losses, the 89-year-old firm has been searching for a buyer since October. Fleischer, a veteran tax lawyer, turned around Franklin largely by pioneering a new method of hedging home loans, building an institution with a $14 million negative net worth in 1981 into one of the nation's largest and strongest thrifts. Now he has agreed to pay close to $100 million in stock and cash to acquire Rothschild's formidable network of broker-dealers. This includes $30 million he already has lent to the troubled investment banking house. The new owner says he will lead the firm back to what it does best: research, investment banking, and bond trading. ''Ernie Fleischer has only one major fault,'' says Federal Reserve governor Wayne Angell, once a consultant for Franklin. ''He thinks other people are as smart as he is.'' During the transition, Rothschild employees will also have the benefit of Fleischer's folksy, homespun wife, Barbara, 52, who helps out with personnel and public relations matters at Franklin. New to the big leagues, the Fleischers still sound a little like Dorothy in the Wizard of Oz. Sighs Barbara, back in Kansas after her latest trip to Wall Street: ''I'm very glad to be home. ''