Vanity Fair has an excerpt from the new Joe Nocera & Bethany McClean book on the financial crisis. From a chapter on Merrill Lynch’s meltdown, here is an entertaining snippet: [-]
In September, without informing the board, O’Neal arranged a secret meeting with Ken Lewis, the C.E.O. of Bank of America, who had long lusted after Merrill Lynch. Even before the meeting, the two men had talked about a deal, and Lewis had even thrown out a number: $90 a share. At the secret meeting, O’Neal suggested bumping the price to $100. Lewis didn’t object.
After the meeting, O’Neal went to see Alberto Cribiore, a financier and old friend whom O’Neal had added to the Merrill board in 2003. Cribiore’s reaction to a possible Bank of America deal was negative in the extreme. “Stan, Ken Lewis is an asshole,” he said, according to the account O’Neal gave to Fortune. (Cribiore would later say he didn’t recall this conversation.) O’Neal concluded that if he couldn’t bring Cribiore around, he wouldn’t be able to bring any of the other directors around either. So he dropped the idea. But when the other directors found out he had approached Ken Lewis but never informed them, they were furious.
By then O’Neal was talking to Merrill’s board members about the firm’s exposure to subprime risk. The directors, of course, were startled. The board hired its own outside lawyer to advise it; a number of directors asked for tutorials on C.D.O.’s.
Even more startling to the directors was O’Neal’s demeanor. Almost overnight, he had gone from appearing unworried about Merrill’s subprime exposure to being deeply and openly pessimistic. It was such an abrupt about-face that the Merrill directors had a difficult time taking him completely seriously. They thought O’Neal was panicking. But he wasn’t. This time, O’Neal was dead right.
In early October, O’Neal finally did something many at Merrill thought he should have done much earlier. He fired Semerci. As he was being escorted out the door, according to an H.R. executive, Semerci asked that someone retrieve some money taped inside a drawer in his desk. When the security personnel went to get the money, they discovered it was nearly $10,000, in sequential hundred-dollar bills.
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