By Greg Farrell
The intimate, fly-on-the wall story of the decline and fall of an the USA icon
With one extraordinary exception, the corporations that make up what we all know as Wall highway have continually been a part of an inbred, insular tradition that almost all humans in simple terms vaguely comprehend. The exception was once Merrill Lynch, an organization that revolutionized the inventory industry by means of bringing Wall road to major highway, constructing workplaces in far-flung towns and cities lengthy neglected via the giants of finance. With its “thundering herd” of economic advisers, possibly no different enterprise, no matter if in monetary prone or somewhere else, so epitomized the yank spirit. Merrill Lynch was once not just “bullish on America,” it used to be a tremendous the reason is, such a lot of general americans have been capable of develop prosperous by means of making an investment within the inventory market.
Merrill Lynch used to be an icon. Its unexpected decline, cave in, and sale to financial institution of the USA used to be a surprise. How did it ensue? Why did it take place? And what does this tale of greed, hubris, and incompetence let us know concerning the tradition of Wall highway that keeps to this present day although it got here as regards to destroying the yankee economic system? A tradition within which the CEO of a company wasting $28 billion pushes challenging to be paid a $25 million bonus. A tradition within which Merrill Lynch executives are assured bonuses of $30 million and $40 million for 4 months’ paintings, even whereas the enterprise is suffering to lessen its losses through firing hundreds of thousands of employees.
Based on unprecedented assets at either Merrill Lynch and financial institution of the US, Greg Farrell’s Crash of the Titans is a Shakespearean saga of 3 wrong masters of the universe. E. Stanley O’Neal, whose inspiring upward thrust from the segregated South to the nook place of work of Merrill Lynch—where he engineered a profitable turnaround—was undone via his trust smooth-talking salesman may well deal with essentially the most tricky jobs on Wall road. simply because he loved O’Neal’s help, this government used to be allowed to accumulate an superb $30 billion place in CDOs at the firm’s stability sheet, at a time while all different Wall highway companies have been desperately attempting to go out the enterprise. After O’Neal comes John Thain, the cerebral, MIT-educated technocrat whose rescue of the hot York inventory alternate earned him the nickname “Super Thain.” He was once employed to save lots of Merrill Lynch in overdue 2007, yet his trust that the markets may rebound led him to underestimate the intensity of Merrill’s difficulties. eventually, we meet financial institution of the US CEO Ken Lewis, a road fighter raised slightly above the poverty line in rural Georgia, whose “my approach or the street” administration variety suffers fools extra simply than power opponents, and who made a $50 billion dedication over a September weekend to shop for a company he fairly didn’t comprehend, hence jeopardizing his personal institution.
The merger itself seems to be a extraordinary mix of cultures that mix like oil and water, the place slick Wall road bankers unexpectedly locate themselves reporting to a solid of characters directly out of the Beverly Hillbillies. BofA’s inbred tradition, which perceived big apple banks its enemies, used to be in response to loyalty and a good-ol’-boy community during which competence performed moment mess around to blind obedience.
Crash of the Titans is a monetary mystery that places you within the theater because the historical occasions of the monetary difficulty spread and other people accountable for billion of bucks of alternative people’s funds gamble recklessly to augment their energy and their paychecks or to save lots of their very own skins. Its wealth of never-before-revealed info and concentrate on icons of company the US make it the ebook that places jointly all the things of the Wall highway disaster.
From the Hardcover edition.
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Additional info for Crash of the Titans: Greed, Hubris, the Fall of Merrill Lynch, and the Near-Collapse of Bank of America
I don’t are looking to discuss them. ” “Why? It’s basically logical that they'd be integrated in this type of checklist. ” “Paul, if we have been to mix with financial institution of the USA, we wouldn’t be working it. We wouldn’t be on top of things. ” the assumption of merging with one other financial institution simply made feel, it seems that, if Thain was once going to finish up being the CEO. “I didn’t needless to say factor to join the criteria,” Wetzel stated. Thain leaned his head down towards Wetzel, who was once a couple of inches shorter. “Paul, do you need to paintings for Ken Lewis? ” ON THURSDAY, APRIL 24, Merrill Lynch held its annual shareholder assembly within the third-floor convention room. on the board assembly that came about in a while, at the thirty-third ground, numerous administrators, together with John Finnegan, desired to understand how the cave in of undergo Stearns may well impact Merrill Lynch. Merrill’s company was once essentially more fit than undergo Stearns’s, Thain stated, as the wealth administration enterprise controlled by way of the firm’s herd of 16,000 monetary advisors supplied a gentle movement of source of revenue. that non-public patron enterprise may aid Merrill climate any destiny storms. “Are you definite that may be adequate to guard us? ” Finnegan requested. “Bear’s genuine challenge used to be loss of liquidity,” Thain defined, relating the significance of getting extra funds available. “They have been lengthy on advertisement paper and their leading brokerage enterprise held $30 billion, whereas their money available was once basically $18 billion. ” As consistently, Thain projected an air of entire self assurance. in the course of his first few board conferences, specifically on the dinners that kicked off company, Thain could make extensive declarations of truth touching on every thing from politics to finance, with the air of somebody who harbors without doubt of the reality of his phrases. in the course of what used to be shaping as much as be an enticing presidential crusade, for instance, Thain remarked numerous instances at the self-evident correctness of Republican positions, interspersed with feedback of Senator Hillary Clinton, then a candidate for the Democratic nomination. It was once transparent he wasn’t soliciting enter with a view to have a dialogue approximately politics. Nor had he thought of no matter if any board individuals have been Clinton supporters. a couple of WEEK LATER, at a gathering along with his most sensible executives, Thain pointed out that a few senior humans have been approximately to hitch the company, former Goldman Sachs colleagues Tom Montag and Peter Kraus. McCann hurried. “John, we’ve resolved the entire matters surrounding funding banking,” stated McCann. “What are you contemplating hiring Peter Kraus for? ” Thain kept away from direct eye touch with McCann, and acknowledged that Kraus may be worthy to him in a number of methods. LUNCH WASN’T SCHEDULED till midday, yet Paul Wetzel invited Nelson Chai right down to the twenty-second ground a bit early, at 11:45, to inform him approximately his expectancies for the assembly. Having commuted from side to side from Tokyo for 2 months, Wetzel used to be now accountable for forty-five humans within the approach division, and able to pass. Wetzel had invited Chai down so he may well meet the method workforce face-to-face.