(Adds comment from Stephen Schwarzman)

By Joshua Franklin

March 20 (Reuters) - Billionaire Wall Street financier Peter Peterson, who co-founded private equity firm Blackstone Group LP and served as U.S. President Richard Nixon's commerce secretary, died on Tuesday of natural causes, his family said. He was 91.

"As a first-generation American born in Kearney, Nebraska, Pete exceeded all of his expectations in becoming a successful businessman, statesman and philanthropist," the Peterson family said in a statement.

The son of Greek immigrants who operated a diner in Kearney, Peterson founded Blackstone in 1985 with Stephen Schwarzman, with an initial investment of $200,000.

The firm, which is still led by 71-year-old Schwarzman, now manages more than $400 billion in assets and went public in 2007. Forbes estimated Peterson's net worth at $2 billion.

Peterson and Schwarzman settled on the Blackstone name by combining the German meaning of 'schwarz', which is black, with the meaning of 'petros' in Greek, which translates as stone.

"Pete led an incredible life, leaving a lasting mark on both Blackstone and the broader world. On behalf of the firm and its more than 2,000 employees, we extend our deepest condolences to the Peterson family," Schwarzman said in a statement.

Peterson received an undergraduate degree from Northwestern University in 1947 and an MBA from the University of Chicago Graduate School of Business in 1951.

He joined the Nixon administration in 1971, serving as assistant to the president for international economic affairs and then commerce secretary from 1972-73.

From Washington he went to Wall Street and was chairman and chief executive at investment bank Lehman Brothers, where he worked until 1983.

In his later years, Peterson focused more on philanthropy and in 2008 established the Peter G. Peterson Foundation.

In 2010, he signed The Giving Pledge, an initiative by investor Warren Buffett and Microsoft co-founder Bill Gates to encourage the world's billionaires to give away at least 50 percent of their wealth to charity.

Peterson is survived by his wife, five children and nine grandchildren.

(Reporting by Joshua Franklin in Boston; Editing by Rosalba O'Brien and Lisa Shumaker)