The Collapse of Merill Lynch Now Told in ‘Crash of the Titans’
For many, many years, Merrill Lynch had good reason to be “Bullish on America.”
With more than 15,000 brokers and $2.2 trillion in client assets Merrill Lynch was the world's largest brokerage. It clawed its way to the top and revolutionized the stock market by bringing Wall Street to Main Street.
But in September 2008 – at the height of the financial crisis, it ceased to exist as a separate entity when it was acquired by Bank of America.
The world, the company, the Street was in shock.
How could this American institution collapse almost overnight?
In his meticulously researched new book, Crash of the Titans: Greed, Hubris, The Fall of Merrill Lynch and the Near-Collapse of Bank of America, Greg Farrell reveals it all in never before reported detail.
In this guest author blog Farrell shares how his book came to be and if you continue on, you can read an excerpt from Crash of the Titans.
BEYOND THE "SHAMING OF JOHN THAIN"
Guest Author Blog from Greg Farrell, author of Crash of the Titans: Greed, Hubris, The Fall of Merrill Lynch and the Near-Collapse of Bank of America
In November 2008, just two months after Merrill Lynch struck a deal to sell itself to Bank of America for $50bn, an editor at the FT Weekend magazine asked me and a colleague, Henny Sender, to put together a profile of Merrill CEO John Thain.
The theme of the article was that Thain, by agreeing to sell Merrill, had made the right move over the tumultuous weekend of September 13-14, where Lehman Brothers CEO Dick Fuld had erred by stubbornly hanging on too long, to the point where Lehman collapsed in bankruptcy.
Over the course of several weeks, Henny and I discovered that the Thain story was more interesting than what was generally known. By late December both of us had learned that Thain’s support within Merrill was not particularly deep, and his support among outside investors had also eroded during the course of his year at the helm.
When Thain was fired in late January, the story took on an entirely new trajectory. In March 2009, “The Shaming of John Thain”was published in the FT Weekend section, describing some of the challenges that undermined Thain at Merrill and eventually led him to run afoul of Bank of America CEO Ken Lewis.
When I started writing this book a year ago, it was clear that I would have to reconstruct the events leading up to the ouster of Stan O’Neal, Thain’s predecessor at Merrill, in October 2007.
I would also have to dig into the Bank of America side of the story, so I could explain to readers why Ken Lewis was willing to risk his bank’s financial health to pull off the acquisition of Merrill Lynch.
The deeper I dug into the story of how Merrill Lynch imploded, the more I was struck by how sad a saga it was. For the second half of the 20th century, Merrill Lynch was synonymous with the health of the nation’s financial markets and the optimism of post-war America.
But by the dawn of the 21st century, Merrill had begun to change. Instead of being a financial advisory business, which brought Wall Street to Main Street, it eventually morphed into a Wall Street investment bank, with management pursuing outsized profits in its sales and trading business. It was, of course, the reckless pursuit of profits in the fixed income markets that led to the firm’s downfall.