A lot of people are of the mind that many of the decisions made by Stan O’Neal were responsible for the fall of Merrill Lynch. Decisions such as the ones to fire very senior, long-time employees once he was named CEO, take on a massive amount of risk, perhaps more than was, let’s just call it “prudent,” in the name of profit, etc, etc, etc. The fact that he increased ML’s investments in CDOs from around $1 billion to around $40 billion (-ish) in about 18 months or so, which caused the bank to writedown $8 billion (give or take a few mill) in October 2007, and book its largest quarterly loss ever ($2.24 billion) are things such people cite when they make this argument. But here’s another theory, which is being tested out this morning. Tell me what you think of it: None of this was Stan O’Neal’s fault.
Now, before you jump down my throat, hear me out. This lesser known interpretation of facts comes from someone extremely familiar with the firm, and events that transpired during the O’Neal era. Someone who could tell us, definitively, if we’ve been wrong all along about the former CEO. Obviously, I’m talking about Stan O’Neal.
Stanny, together with William Cohan, explains how contrary to what you’ve probably all thought, Mr. O’Neal is a hero. At least he tried to be, but was sadly cockblocked by a MER director named Alberto Cribiore. According to O’Neal, here’s what really went down. First off, all that shit he put on Merrill’s books? At first he didn’t realize how bad it was, but one day in late August 2007, when he was vacationing at his summer home on Martha’s Vineyard, it all became crystal clear. Once he got back to the city (no need to cut the weekend short), O’Neal told Cribiore that they had a “serious and deep problem,” and that he wanted to sell Merrill. The CEO took a meeting with Ken Lewis and told the Bank of America chief he wanted $100 a share. As E. Stan remembers it, Lewis said “I’m not saying no, but that just requires X amount more dollars of cost-cutting.” In Too Big To Fail Andrew Ross Sorkin recounts that O’Neal added that he wanted to make sure he’d still have a gig if the deal went through. TBTF additionally notes that Lewis thought Big Stan was a dick and the odds of a deal happening at that time were slim to none. Nevertheless! In O’Neal’s retelling of history this morning, he vividly remembers that “BofA wanted this deal.”
Unfortunately, the noted golfer claims, Cribiore told him no dice.
It was clear to O’Neal that Cribiore did not like the idea of selling Merrill one bit. “But Stan, Ken Lewis is an asshole,” O’Neal remembers Cribiore saying. He says he doesn’t think Cribiore knows Lewis personally. “It was shorthand for a perception that Bank of America is like the dark empire,” O’Neal says. That was it. For O’Neal, Cribiore’s comment spelled the end of any chance he had of selling Merrill to BofA. O’Neal never called Lewis back, despite the allure of a $100-a-share deal. How could O’Neal, a powerful CEO, have wilted that easily — and not even taken the idea to the full board?
Good question!
O’Neal responds: “Alberto was the most knowledgeable person on the board by far about investment banking and about all the issues that we were talking about. If Alberto didn’t buy the argument, there was no way I was going to be able to sell the argument to anybody else. And this was a very low-key discussion in his office with no pressure, nobody else listening.”
Oh, okay (BTW: Cribiore told Cohan he has “no recollection of discussing a possible sale.” Same diff, no diff). What happened next, thanks to Alberto’s pigheadedness and whatever Jedi mind tricks he played on Stan, was the disastrous quarterly earnings, and O’Neal’s canning. After the sale to BAC a year later, Stan apparently sent an email to Cribs that said: “My former friend, you should have helped me sell this business when we had the chance.”
So, anyway! Whether or not you are buying this story, I think we can all just appreciate the fact that now that Stan O’Neal is speaking, we have stuff like this to appreciate:
The CDO problem in 2007 left Merrill, as O’Neal puts it, like “a fighter in the middle of the ring with your hands tied behind you and an opponent, whenever he chose, could just whale away on you, punch you right in the face. And there was no referee, so he could kick you in the balls, give you an elbow to the chin and you could do nothing except stand there until he decided he was tired or finished or beneficent or whatever it was and turned away and walked out of the ring. That seemed to me to be unbearable. We had to have alternatives.”
Merrill Lynch’s $50 Billion Feud [Fortune]
Stan, it’s ok. Until they come after your stack of dough, it doesn’t really matter
Stan O’Neal pays me good money to service his dogs.
Dennis Kneale, MD
mmmmmmmmmmmbullshit
That metaphor makes me so horny.
S. O’N = Bull shit. Assembly line worker that went through GM University, and then went to HBS (MBA) on a GM scholarship. He should have stayed at GM Treasury.
Does he even appreciate lacrosse?
Doesn’t he look like that guy from the Soul Train?
So many words.
Who cares about CDO losses? Just tell me how much he improved his golf handicap while he was at ML.
Oh, and I am certain he adds zero value to Alcoa’s Board.
Black Irish = Cubicle killaz
@7 and what pray tell do you think the last paragraph is about? obviously you’re not a golfer.
I have no problem with this.
-jcayne
Finally I understand why Divé put a “Sell” on ML when Cribiore was named interim chair.
that last paragraph = my friday night
-LB
Thats the guy in the cubicle photo! shit i knew he looked familiar.
“My former friend, you should have helped me sell this business when we had the chance.”
@14 not funny at all, and that’s coming from someone who appreciates jokes about the guy in the cubicle photo.
OK, this morning there is a disproportionate emphasis on very minor discretions made by african americans and Indians. Examine your motives, Breaking Media.
@17 = Tawana Brawly
What kind of maniac would call THREE hookers, in a single day, in quick succession???
I believe ya buddy.
serious question: is it “whale away” or “wail away”?
Stan’s a lying cheat who fired anyone he deamed a threat to him because they had a brain and experience. The only consolation is that he’ll be tied up in court the rest of his life trying keep the cash he made by blowing up the firm. He’ll rot in hell one day.
@21 whale.
http://idioms.thefreedictionary.com/whaling
thanks!
-21
So he finally grew himself a pair and used the word “balls?”
I am shocked!
Wait, I thought the guy in the photo was the guy who ran Countrywide?
If anything, O’Neal should have known better than to trust Crib’s advice. Crib raised a PE fund 12 years ago that has returned a third of capital back to investors. Way to collect fees bro!
where was kevin ramb when all this was going on???
Stan forgets to mention how he was responsible for getting ML into the position where it needed to sell itself in the first place.
Fortune article would have been that much more interesting if Beth had authored it.
fuck o’neal.
fuck lewis.
fuck merrill.
and if you’re down with them, fuck you too.
- Tupac, ex-tech analyst
Tupac….it’s Stan…why don’t we have dinner sometime?
If O’Neal didn’t know the CDOs were shit by the start of August 2007 he’s an idiot. The auction rate CDOs had already started blowing up in late July and had been propped up for months. What a clown.
@30: Three, in one day?
If he didnt know the risk was there, he’s responsible for lack of risk control. Since he did, he’s a liar, and more importantly, responsible. The problem was so big, and such a concern, that he played [_] rounds of golf in Aug/Sep ’07: (answer: http://www.ghin.com). More important question, how many conversations did Stan have directly with Dow Kim, who ran fixed income, in 2006/2007 about risk management. Stan is not only responsible for MLs collapse, he is criminally negligent and should be in jail. What an asshole.
Is it worse to be a liar or an idiot?
Stan O’neal is liquid and loving life.
@35 Ken, I thought you were dead.
@6 Close! Stanny O’ looks like an older “Smoove B” from the Onion-
Stan in his younger days
http://www.theonion.com/articles/let-smoove-rock-your-body-and-world,16334/
Martha’s Vineyard? But he’s… black!
Stan is up to his revisionist history again. He alone created the problem. Alberto and the rest of the Board were clueless about what was going on!
Scum. May risk my right to life and liberty to take a shot at this fuck.
Hey Stan, since you made a bundle how about a little redistribution? Get It?
Same to you tupach you jerk
Personal attacks on Mr O’Neal are pointless at this stage. What is now known is that Wall Street bankers, their CEO’s, the Credit Rating Agencies and the Auditing Firms, yes the auditing firms all had no clue how risky these CDO’ s were. Everyone failed due to Group Think !
The only beneficiary of this melt-down was John Paulson – do your research.
oh sure if only I had had more time…isn’t that how the song goes?
oh sure if only I had had more time…isn’t that how the song goes?
Stan stands for the worst of the idea of capitalism and the US, being a boss and thinking that one could delegate all responsibilities, go golfing and enjoy life. The question should’ve been how the hell did ML got into such a position instead in the first place instead of complaining how he got blocked from trying to sell…
And the manner of which such a ludicrous CEO could walk away with such a big “compensation” package with a smirk on his face. Ridiculous… sheer stupidity on the board’s part as well..
Furthermore, Alcoa signed him on as a board member? I will not touch Alcoa within a close mile with such crooks onboard..
Crash of the Titans is an excellently researched, step-by-step description of the fall of ML, orchestrated by greed, greed, greed. Mr. O’Neal was but one of thousands of guilty parties.
Crash of the Titans is an excellently researched, step-by-step description of the fall of ML, orchestrated by greed, greed, greed. Mr. O’Neal was but one of thousands of guilty parties.
dis negro should rot in hell
Tell ‘em Stan! They try and talk bad about ya, but look what happened? You could of gotten BAC on the hook for $100 a share, and Merrill ended up folding a year later for FAR less.
Cribiore knows you’re telling the truth. He didn’t want to sell Mother Merrill to a Charlotte-based retail bank. So the board pushes you out the door and Cribs brings in Thain, who has his head up his ass until its too late.
Crash of The Titans spells it all out and backs up O’Neal’s statements.
I worked for Merrill Lynch. I worked in investments. Stan ONeal is lying. He and his hubris are directly responsible for what happened, and he floated away with a golden parachute. I've met and spoken with the liar when I worked there. Cut-throat, power-mad and untrustworthy. He should be in jail, and his parachute distributed to those he cheated in his hubris.
And NOW he talks, so he's a good guy? Please…
Stan Oneal is a liar and a criminal. And he got away with it.
What a load of C-R-A-P. Bess Levin, you have been snookered by a guy who lives in a world of his own making. Yep, maybe he did try to sell ML to BofA and the proposal wasn't welcomed by one of the ML board's most influential directors. Still, he never said in your article (or anywhere) that he tried to explain the CDO time bomb to the board (or to make the traders who put ML into the position explain it to them) so that they could see the merit of selling their gasoline-soaked house of cards to a bigger sucker before it caught fire. Nor did he mention (in your article or anywhere) that he tried to unwind any of the CDO exposure once the true risk was known.
He was a weak, petty, vindictive leader who sought nothing but confirmation bias from his boot-licking, hand-picked underlings. ML's shareholders got what they deserved from his leadership and history will give him what he deserves for his actions. He'll be forgotten if he hasn't already been.
I think Stan O Neal was a great CEO
He should run for President of the
United States.
On his watch Merrill traded up t0
93 dollars a share.
Everybody looks for a scapegoat
to blame when things go bad.
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