NYTimes: Merrill's Chief Defends Recent Sale

Thain still cleaning up O'Neal's mess

Over the past year, Merrill has written down over $40 million in bad debt. This on the heels of selling $31 billion at a fire sale price of $6.7 billion, while also serving as the lender of $5 billion to the buyer, Lone Star, a private equity firm in Dallas. And, of course, most of this overarching risk-taking was done under the Stan O'Neal regime. O'Neal, as everyone at Merrill would say, seemed to be a cold, calculating and a "spreadsheet" guy. He axed jobs, backstabbed his fellow executives, and increased firm risk all in effort to transform the firm into a "Goldman Sachs" firm. At the end of it, he wanted Merrill to be like Goldman.

Instead, Merrill should have stayed Merrill and not worry about Goldman. O'Neal wanted Merrill to be Goldman so bad that even if it meant increasing the risk profile on the trading desk then so be it. Unfortunately, it all backfired. He should have taken better care of the firm's crown jewel: the firm's army of 15,000 brokers.

Will Merrill survive this trouble? I think so, but unfortunately, at the cost of value destruction. They have probably raised enough capital by now but they real key would be if you see them selling their Blackrock stake. If they do then I would immediately say "new ballgame."

NYTimes: Merrill's Chief Defends Recent Sale