The Collapse of Merill Lynch Now Told in ‘Crash of the Titans’
EXCERPT -" A TRIBE OF SMALL-TIME HILLBILLIES"
Excerpted from Crash of the Titans: Greed, Hubris, the Fall of Merrill Lynch, and the Near-Collapse of Bank of America. Copyright @ 2010 by Greg Farrell. Reprinted by Permission of Crown Business, an imprint of the Crown Publishing Group, a division of Random House, Inc., New York.
Merrill Lynch and Bank of America were, in many ways, the odd couple of American finance.
Merrill was seen as epitomizing Wall Street excess, especially those stratospheric bonuses. New York bankers, on the other hand, saw the Charlotte-based B of A as a tribe of small-time hillbillies. Once the acquistion went through these mutual suspicions metasticized in countless ways, perhaps none more tellingly than the verbal combat between lawyers Pete Kelly of Merrill and Tim Mayopoulos of B of A.
PETE KELLY ARRIVED IN Charlotte from New York early the next morning. He reported to his new boss, Tim Mayopoulos, to learn more about what was expected of him.
The meeting took place in a conference room on the fifty-seventh floor of the Bank of America building, just down the hall from Mayopoulos’s office.
Kelly was going to become general counsel to the investment banking unit of Bank of America–Merrill Lynch. Bill Caccamise, a BofA veteran who had been tapped for that job, would become chief counsel of the Merrill Lynch private client business.
Kelly was among the few Merrill Lynch lawyers who had been offered a position in the new organization, but it was only because John Thain and Greg Fleming had fought hard on his behalf that his appointment had been approved by Alphin and HR.
The Kelly decision embarrassed Mayopoulos, since he had to move Caccamise out of a position that had already been promised to him.
In recent weeks, Kelly had sensed some reluctance on the part of Mayopoulos to have him on his team. Now, alone with his new boss, Kelly watched that reluctance burst forth in a spasm of contempt.
“I picked you for this position,” Mayopoulos said with an edge in his voice. “You’re going to do the job the way I tell you to, and don’t forget it.”
“We’ll see about that,” replied Kelly, who knew he had been forced on Mayopoulos by Thain and Fleming.
“No. We won’t see about that. That’s the way it’s going to be. I know more about investment banking than you do. I’m better at this than you are!”
“If saying it makes it so,” snapped Kelly. “Otherwise, it’s up to the client to decide.”
“You need to manage your ambition. I’m going to be micromanaging everything you do, so don’t get cute with me. You’re going to do exactly what I tell you to. You’re going to hire the people I tell you to hire, and you’re not going to send a letter to any client, at any time, until I’ve approved it.”
“It’s not going to work that way,” said Kelly, whose Irish was now up.
“Yes, it is,” Mayopoulos hissed. “That’s the way we do things here. I don’t care who your friends are.”
"This place is a lunatic asylum. We have to get out of here. I met with Mayopoulos this morning and in the middle of the meeting, they took him out. It’s insane."
Kelly could tell that Mayopoulos, even as a lawyer, wasn’t accustomed to pushback from subordinates. The general counsel was becoming enraged by Kelly’s responses. But Kelly had decided, before flying down that morning, that if he couldn’t operate the way he wanted to in his new job, then he didn’t want the position. He would dare Mayopoulos to fire him rather than conform to whatever management system they tried to cram down his throat.
After about an hour, Mayopoulos took Kelly to a different conference room, where they were joined by Caccamise and David Grimes, the chief operating officer of BofA’s legal department.
Now it was three against one, but the tone of the meeting turned more professional. Mayopoulos recommended which lawyers would be the best fit to work in Kelly’s unit, and Caccamise seconded those choices, having known the candidates from BofA Securities.
Kelly, who didn’t want to be forced into making rash personnel decisions about his unit, stood his ground.
“I don’t think I need you three guys in a room telling me how to run this unit,” he said. “I’ll figure it out on my own.”
“You just don’t get it, do you?” said Mayopoulos. “I decide how this is supposed to work, not you!”
“I’m responsible for this area,” Kelly insisted. “I’ll make the calls.”
They had come to an impasse, and Kelly felt Mayopoulos may have reached the breaking point with him.
The door opened, and Mayopoulos’s secretary entered the room. “Tim, Amy Brinkley needs you for a moment in your office. It’s important,” she said discreetly.
Mayopoulos was adamant as he left the conference room. “We’re going to finish this,” he snapped at Kelly. “Don’t you go anywhere.”
He strode down the hall toward his office and entered. When he saw Brinkley, his boss, he greeted her.
“Tim, Ken is replacing you as general counsel,” she said coldly. “He just decided this. Brian Moynihan is going to become the new general counsel.”
Mayopoulos was stunned and couldn’t even get a word out.
“You are terminated from Bank of America as of this moment, and you are to leave the premises immediately. You can’t take anything with you. There’s someone from HR outside the office who has your severance papers.”
And with that, Brinkley left, and in walked a man from Steele Alphin’s department holding a sheaf of papers. He took Mayopoulos’s corporate ID card, company credit card, BlackBerry, and office keys, and put them down on the desk. Then, having done everything but read him his Miranda rights, he escorted Mayopoulos to the elevator and down to the executive garage in the basement of the building, and got into Mayopoulos’s car so that he could physically escort him off the premises.
Kelly and Caccamise were still waiting in the conference room about thirty minutes later when Mayopoulos’s secretary returned. “Mr. Mayopoulos won’t be back today,” she informed them, and then closed the door.
Kelly looked at Caccamise. “I don’t know what my next move here is,” he said. But Caccamise said nothing. After about fifteen minutes, the same woman returned. “Could you please follow me?” she said, leading the two lawyers up to a smaller conference room on the fifty-eighth floor, the executive suite.
On the way up the stairs, Kelly figured out how it would go down: They’d bring him to the executive floor, shoot him, and give the job to Caccamise.
The two men arrived at a small conference room to find Brian Moynihan sitting there, immersed in paperwork. Kelly had met Moynihan several times through the transition process.
“Tim’s no longer with the company. I’m the general counsel now,” said Moynihan, as Kelly just stared. “I’m really busy right now, so I don’t have much time to talk.”
“Well, uh, you’re the third general counsel I’ve been reporting to today,” said Kelly. “I was just told what my job was by Mayopoulos, but I’m not sure he even wanted me working for him.”
“Don’t worry about it,” said Moynihan, who appeared to be distracted with a number of issues. “I’ve heard good things about you. Forget what Tim said. I’m busy, so we’ll talk another time, but I’m glad you’re on the team.”
Kelly and Caccamise left the office. Kelly went straight to the airport, where he called Fleming.
“Greg, this place is a lunatic asylum. We have to get out of here. I met with Mayopoulos this morning and in the middle of the meeting, they took him out. It’s insane!”