jump to navigation

Merrill, CDO’s and Swaps November 9, 2008

Posted by Who? in Business, Random.
Tags: , , , , ,
trackback

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.

Advertisements

Comments»

No comments yet — be the first.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: