O’Neal can have few complaints. His bank has just been forced to write off $8bn of losses from bad bets on the US sub-prime mortgage market, which (not surprisingly) yielded a record quarterly loss. Merrill wasn’t the only Wall Street bank to bet its shirt on sub-prime and lose, but it does seem to have taken the biggest hit. Regardless of how the rest of the bank’s been doing, that’s a pretty damning indictment of its strategy and leadership.
These huge losses could (and probably should) have been enough to put O’Neal out of a job on their own. But any thoughts he may have had of trying to ride out the storm went out of the window last week, when he was caught talking to Wachovia chairman G Kennedy Thompson about a possible merger – without bothering to ask his own board first. In the strange world of Wall Street, this may actually have been seen as a more serious error of judgement.
Of course, there is a slight whiff of hypocrisy about all the condemnation this has received. After all, how many big Wall Street deals don’t begin life as a private conversation between two old banking chums? O’Neal was hardly the first person to do this – he was just careless enough to get caught.
Still, although his Wall Street career may have gone up in flames, O’Neal does have one rather large consolation – a severance package likely to be in the region of $160m, according to reports. So he won’t be applying for a sub-prime mortgage of his own any time soon.
All of which means it’s hard to feel too much sympathy for the man. But as with Lord Browne earlier this year, we can’t help feeling sorry to see such a well-respected figure suffer such an ignominious end to his reign – particularly since O’Neal is one of the few African-Americans running big US companies. This obviously doesn’t give him any more right to hold onto his job, but it still seems a shame that the world of high finance – largely a white male preserve already – is about to get a little more homogenised.