This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Five Dumbest Things on Wall Street This Week

1. Last Stop on the Bus

Stan O'Neal finally got the hook at Merrill Lynch (MER).

The brokerage firm's CEO stepped down Tuesday. Merrill directors had started pushing for O'Neal's ouster after the firm was forced last week into an $8 billion writedown of subprime mortgage loans and collateralized debt obligations. O'Neal didn't help matters by (not so) secretly pursuing a merger with Wachovia (WB) that would have lined his pocket with millions of dollars in change-of-control payments.

News leaks over the weekend made it clear that O'Neal was finished, but his departure was delayed while lawyers hammered out the terms of his departure. And for O'Neal, the wait was well worth it.

Despite the huge writedown, Wall Street's expectation that Merrill still faces billions of dollars of future CDO-related losses, and the fact Merrill shares have lost nearly a third of their value this year -- the exec will walk away with a $160 million slug of stock, pension money and deferred compensation. This on top of the $48 million he pulled down last year and his $37 million payday in 2005. Plus, he gets an office and an assistant for three years.

O'Neal gets his sweet going-away package even though he steered Merrill into the teeth of the worst credit crunch in a generation. On his watch, the firm became the biggest underwriter of CDOs -- the esoteric debt whose collapse has left Wall Street firms with billions of dollars in losses this fall.

Adding to the absurdity, the deal allows O'Neal to say he "retired" from Merrill. The wording allows O'Neal to collect all his winnings while making his departure sound orderly -- a quaint notion belied by the fact that Merrill hasn't yet lined up a new CEO to take his place.

Indeed, former Merrill chief Dan Tully complained to Bloomberg this week that O'Neal's ruthless elimination of potential rivals left the firm shorthanded. He said that during his reign Merrill's board spent countless hours anticipating unforeseen executive changes -- an exercise he referred to as the "hit-by-the-bus scenario."

O'Neal had his own plan, though, and it didn't require any long meetings or elaborate flow charts.

He just pushed Merrill shareholders under the bus.

Dumb-o-Meter score: 95. Tully previously called O'Neal's $8 billion writedown mess "sickening."
1 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
ALU $3.31 -1.80%
ODP $7.89 0.90%
S $5.28 1.70%
T $33.13 -0.48%
VZ $45.77 -0.65%

Markets

Chart of I:DJI
DOW 16,540.15 -102.86 -0.62%
S&P 500 1,976.37 -12.50 -0.63%
NASDAQ 4,802.6010 -25.7240 -0.53%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs