O Neal

What went wrong at Merrill Lynch?

Jim Kim — Sun, 09 Nov 2008 09:35:00 -0500

The New York Times offers a long narrative about the fall of Merrill Lynch. The basic story line is that "two indispensable members of (Stan) O'Neal's clique"--Osman Semerci, who, among other things, ran Merrill's bond unit, and Ahmass Fakahany, the firm's vice chairman and chief administrative officer--helped O'Neal tailor dubious risk practices. Those practices allowed the firm to build up the CDO portfolio that would eventually topple the firm, forcing it into the hands of Bank of America. That it ended up holding so much of its product seems shocking. You would think it would want to offload the product as soon as they could create it. My sense is that they were probably forced to hold the senior portions because they couldn't sell it; people wanted the higher yielding stuff back then. In the end, perhaps, there is some poetic justice to choking on your own food.

For more:
- here's the article

Will CEO turmoil continue?

Fri, 18 Apr 2008 06:59:56 -0400

We've seen a lot of high profile CEO lose their jobs. Stanley O'Neal. Chuck Prince. Jimmy Cayne. But at least one MarketWatch commentator thinks at least two other fairly big name CEOs ought to be similarly shown the door. He says that Ken Thompson, of Wachovia, and Kerry Killinger, of Washington Mutual, "were exposed as overhyped pedestrian CEOs this week." Ouch! PR folks, do something. Killinger was rapped for the $1.1 billion loss and the required dilutive $7 billion capital infusion from private equity investors. Thomson was pilloried for the disastrous Golden West purchase. The jury remains out on several CEOs, including Ken Lewis of Bank of America, who's betting big on Countrywide.

For more:
- here's the commentary

Shareholders to take on Wall Street banks?

Wed, 12 Mar 2008 07:59:55 -0400

Is a shareholder revolt in the making against top banks? Well, that's a possibility, notes the Financial Times. We'll get an idea next month, when Morgan Stanley holds its annual meeting. So far, CtW Investment Group is the only group that is making any noise. It may seek to prevent John Mack from holding the CEO and chairman position, which would be seen as reasonable if there weren't a credit crisis. But heads of top CEOs already have rolled. That may be enough for most shareholders for now. It's possible we'll see more campaigns to withhold votes from directors. Certainly, audit committees could be in for some bad publicity. No one would be surprised if shareholders suits were lodged, citing the recent stock drops.

For more:
- here's some background from the Financial Times

Related Articles:
Banks face activists in proxy season. Article
SPOTLIGHT: 3 Blind Mice. Read
O'Neal joins illustrious ranks of ousted CEOs. Article

John Mack on the hot seat

Tue, 11 Mar 2008 07:59:55 -0400

John Mack, so far, has been spared the same fate as Merrill Lynch's Stanley O'Neal, Citigroup's Chuck Prince and Bear Stearns' Jimmy Cayne. But the CEO and chairman of Morgan Stanley has a lot weighing on him right now. At least one activist shareholder group is weighing a campaign to install an independent chairman, according to the New York Times. It's been a tough road for the man many thought would save Morgan Stanley. He championed the use of risk, perhaps eying the results at archrival Goldman Sachs. But the aggressive deployment of the balance sheet seemed to backfire when the credit crunch hit. The board, so far, has voiced confidence in Mack as chairman and CEO. But a nice symbolic move--one to underscore that it's taking its role seriously--would be to separate the positions.

For more:
- here's the New York Times article

Related Articles:
John Mack fared well in 2007. Article
SPOTLIGHT: 3 blind mice. Read
Morgan Stanley, Merrill Lynch diverge on strategy. Article
Pay practices questioned on Wall Street. Article
Morgan Stanley walking the plank? China deal announced. Article

SPOTLIGHT: 3 Blind Mice

Mon, 10 Mar 2008 07:59:52 -0400

See how they ..defend their pay. Angelo Mizilo, Stanley O' Neal and Chuck Prince all appeared before a house committee and argued they deserved their pay even as their companies reeled. Article