Crash of the Titans: Greed, Hubris, the Fall of Merrill Lynch, and the Near-Collapse of Bank of America by Greg Farrell

CHAPTER 1
THE YOUNG TURK
“MY NAME’S TOM SPINELLI,” said the man at the microphone. “Good
morning, Mr. O’Neal, members of the board, executive committee,
and fellow shareholders. I would like to apologize in advance if my
voice appears to be too loud. The reason is because I have subjective
tinnitus; it’s a hearing disorder.”
Spinelli was in the auditorium of Merrill Lynch’s sprawling
corporate center outside Princeton, New Jersey, on the occasion of
the company’s annual meeting on April 27, 2007. Merrill Lynch’s
chief executive, Stan O’Neal, had just reviewed the ninety-threeyear-

old firm’s record-breaking results in 2006 for his audience. The
company he had led since 2002 posted $7.3 billion in profits for the
previous year, dwarfing the 2005 earnings of $5 billion, which were
also a record. O’Neal could now bask in the glow of his success and
soak up the praise bestowed by Spinelli and other investors.
“I would like to emphasize that I’ve been an employee, client, and
shareholder for over thirty-five years,” Spinelli continued. “I do
know that during your tenure here at Merrill Lynch I have
discovered a wealth of new products and services unlike anything
I’ve ever seen in the past. As a client it has enabled me to take full
advantage of so many excellent investment opportunities in the
marketplace. I am now in a position to provide a much more secure
financial future for members of my family and myself.
“This is a comment and a personal observation. I neither have the
inclination or frame of mind to put you in an awkward position.
However it should be stated that thanks to your knowledge, skills,
superb leadership, and the expertise of designated members of the
executive committee, Merrill is now back and in excellent
competitive form.”
Annual shareholder meetings, supposedly the great democratizing
force of corporate America, are curious affairs, with CEOs re-elected
almost by acclamation by the votes of institutional investors
representing huge blocs of votes. The few individual shareholders
who do attend often fall into one of two categories: activists
agitating for change and well-meaning individuals entranced by the
prospect of getting themselves in front of a microphone before a
captive audience.
“As you know, the 2008 presidential election is starting to heat up
again,” Spinelli went on. “I’m convinced that the Democrats will
win back the White House in the aforementioned election. Under
our new presidential administration I am confident that you will be
called upon [by] our president-elect to serve as his, as an elite
member of his or her new cabinet.
“It would be similar to what late President Ronald Reagan did for
former chairman and CEO of Merrill Lynch, Don Regan, in 1980,
who quietly slipped away in 2003. If you accept to do for our
country what you have done for Merrill Lynch, I would no longer
just be a content American, I would be a proud American. Thank
you and have a nice day.”
O’Neal smiled at this bouquet of gushing praise. “Just the
opposite of being too loud,” the CEO said facetiously, pretending not
to hear. “If you would say that again … I’m not sure I caught all of
it.” The audience broke up in laughter.
“Thank you very much for your comments,” O’Neal continued.
“And I have no intention of going anywhere, I’m afraid, because this
is where I want to be. Thank you.”
The annual meeting ended, and O’Neal exulted in his
achievements. He had, single-handedly it seemed, rescued Merrill
Lynch from irrelevance and established himself as one of the most
successful CEOs on Wall Street and in corporate America.

Crash of the Titans: Greed, Hubris, the Fall of Merrill Lynch, and the Near-Collapse of Bank of America by Greg Farrell