Merrill, CDO’s and Swaps

Good article from the times on the bubble and fall of Merrill.

Even the big dogs on Wall Street get caught up in the euphoria that comes with mountains of money.  Makes me realize they aren’t as different as one might think; sure they have an exotic, aka esoteric, vocabulary and work on Wall Street with all its mystique and aura but that doesn’t necesarily mean they are any more intelligent/smart/reflective.  They can still make mistakes.

Of course hindsight is 20/20, but you think someone would have raised the alarm when ML began holding larger amounts of mortgages to generate bigger fees.  Maybe someone did and they were out-shouted by Semerci– sometimes people confuse the loudest/most-obnoxious for the smartest.  $316B in CDO’s carrying anywhere from .4-2.5% fees= 1.4BB-8.0BB.  Lots of people would lose sight of the risk with that kind of money flowing in.  Ultimately, this is a failure of management. 

O’Neal should be held personally responsible to shareholders.  I think a CEO should be responsible for what employees do; call me crazy.  Being responsible for a company being liquidated should not include getting a 160 million dollar exit package.