Friday, October 26, 2007

Dead Man Walking

The New York Times tells us today that the Board of Directors of Merrill Lynch is placing collect calls to a number of Wall Street personalities to gauge their interest in taking over the CEO position from current tenant Stanley O'Neal. You know, Dear Readers: that same Stan O'Neal who just announced the largest quarterly loss in Wall Street history, after projecting somewhat less than half the actual amount only weeks before, and who capped it all by going hat in hand to Wachovia begging them to consider a prophylactic merger. "Wachovia?," you ask. Yes, Wachovia.

Apparently the house of Pierce, Fenner & Smith has not sunk low enough for the MER board to tolerate this. O'Neal's handpicked director poodles are so upset that great clumps of their manicured curls are coming off in their jaws, and they are baying (privately) for O'Neal's blood. Not privately enough, of course, to prevent the entire financial media from picking up the story.

I cannot speculate what will happen next at Mother Merrill, but I can guarantee you O'Neal's days at the helm are numbered. Being a CEO at an investment bank is not unlike crowd surfing at a mosh pit: it's a pretty cool way to move around quickly, you are supported entirely by other peoples' efforts, and everyone tries to get a piece of you. Unfortunately, when the crowd loses interest in supporting you, you tend to fall fast, hard, and painfully. In addition, after dropping you lots of your former investment banking subordinates—both friend and foe—have the added charming tendency to skewer you repeatedly with long knives. Et tu, Brute?

By allowing the news that they are talking to potential CEO replacements to leak into the public domain, Merrill's board have guaranteed a complete collapse of confidence in O'Neal. His enemies (legion, by all accounts) will be gunning for him, and his friends and sycophants will be running for cover. Few administrations of any stripe can stay in office after losing a public vote of no confidence, much less one in the Lord of the Flies environment of investment banking.

Fortunately, O'Neal will no doubt have a plenty cushy negotiated severance package to fall back on. Plus, he always has golf. Should he still feel a little saddened by his newly straitened circumstances, however, he can always console himself with philosophy. I suggest Boethius, for a start.
"Why, O my friends, did ye so often puff me up, telling me that I was fortunate? For he that is fallen low did never firmly stand."

— Boethius, The Consolation of Philosophy

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