Running Merrill was 'like golf,' and other lessons from Mr. O'Neal

Of all the postmortems to be written about the credit market collapse and consequential blood bath taking place on Wall Street, veteran business journalist Michael Lewis’ glimpse into the mind of former-Merrill Lynch CEO Stan O’Neal is certain to be one of the most valuable. Provided it’s real.
According to Lewis, O’Neal, who was forced to retire from his corner office on Oct.30, apparently golfed his way through the financial crisis that cost Merrill an $8.4 billion write down, and ultimately, O’Neal’s own job.

In the 50-days between Aug 12th and Sept. 30, as the credit markets careened into a death spiral, the CEO of one of the nation’s biggest financial institutions, whose losses were mounting by $100 million a day, played 20 rounds of golf. Even with my scant experience at golf, I know that’s equal to, like, 80 hours of Mr. O’Neal’s million-dollar time, which he could have spent at his desk, endeavoring to make up for his firm’s mounting trading losses.

Lewis’ piece is worth reading, not for his keen analysis of what happened in the credit markets (though the former bond trader is up to that task), but because his tale is apparently based on handwritten notes made by O’Neal himselfon the back of his golf score cards!

It’s hard to believe that O’Neal could be as cavalier with his fiduciary duties as the notes (excerpted below) suggest. But if they are legit, then, as Lewis says, there are many lessons to be learned about “the inner workings of the 21st-century Wall Street CEO in crisis” in these “little black smudges made with stubby little pencils.” (Lewis reports that O’Neal’s scores got better as the markets got worse.)

We think even if this devastating, adhoc “diary” turns out to be satire — if O’Neal didn’t write the notes — the mere perception of his lapses present some even more universal lessons in leadership: like the scourge of self-inflicted ignorance and apathy, to say nothing of plain old mismanagement. So we’re sharing a few highlights from O’Neal’s “the little black smudges,” reinterpreted as the Seven Deadly Sins of (Really) Bad Management.

Aug. 18: BIRDIE ON 11 WAS A THING OF BEAUTY. IT WOULDN’T HAVE BEEN POSSIBLE IF I’D ALLOWED MYSELF TO BE DISTRACTED….. GAVE ME ANOTHER THOUGHT: GOLF IS LIKE RUNNING MERRILL LYNCH! THE TRICK IS TO KEEP IT SIMPLE… — Extravagance –

Aug. 26: FIVE BIRDIES AGAINST THREE BOGEYS. ALL THESE UPS AND DOWNS! MOODS SWINGS ARE TREMENDOUS AND EXHILARATING BUT CAN’T LET ANYONE AROUND ME KNOW WHAT I’M FEELING… — Pride –

Aug. 26: FREAKING MARKETS! CELL PHONE RANG WHILE CHIPPING OUT OF A BUNKER. PEOPLE SAYING SUBPRIME MEANS SUBPAR. NOTE TO PEOPLE: SUBPAR IS GOOD! TOOK A MULLIGAN, WHICH IS ONLY FAIR. (CHECK WITH COMPLIANCE?) … MEMO TO USGA: HANDICAPS SHOULD TAKE DAY JOB INTO ACCOUNT. –Gluttony–

Aug. 31: PUTTING ON THE 12TH WHEN A MERRILL CUSTOMER CAME OUT OF THE WOODS AND WHISTLED. MISSED THE PUTT! … WANTED TO DISCUSS HIS PORTFOLIO. SOME PEOPLE! … HOW DID HE FIND ME? WILL OTHERS?
– Wrath –

Sept. 2: PLAYING ALONE AGAIN. CAN’T FIND ANYONE WHO CAN GET AWAY FROM THE DESK — EVEN JIMMY CAYNE [Bear Stearns’ CEO] NOW SAYS HE’S TOO BUSY. QUITTER. I TOLD HIM THAT THE BEAR WILL DO WHAT THE BEAR WILL DO…WALKING DOWN 16TH FAIRWAY I FELT VERY ALONE… ALONE IS HOW LEADERS ARE SUPPOSED TO FEEL IN MOMENTS OF CRISIS. CHURCHILL FELT ALONE, TOO. DID HE GOLF? — Sloth & Envy (of Churchill!)–

Sept. 22: FREAKING FREAKING WATER HAZARD!! … REMEMBER: BIGGER BETS AT ML MEANS LESS TIME HAVING TO THINK ABOUT THE FIRM, AND LESS TIME IN OFFICE MEANS MORE TIME TO SWIM FOR BALLS.. BEST CASE SCENARIO: FIND BALL. WORST CASE SCENARIO: $160 MILLION PAYOUT. — Greed —

Sept. 29: OFFICE CALLED MIDSWING! ON A SATURDAY! WHY EVEN BOTHER TO PLAY ALONE????? 5.1 BILLION REASONS TO BLAME FOR THIS ONE. I THINK.

Sept. 30: MAKE THAT 8.4 BILLION REASONS TO BLAME. – Sloth again –

Of course Mr. O’Neal isn’t the only Wall Street Big Wig whose judgment is being questioned now: his departure was followed swiftly by the ousting of Citigroup CEO Chuck Prince on Nov. 4. James Cayne, Bear Stearns’ chief (and “errant” golf partner of O’Neal!), and Morgan Stanley’s John Mack could be next.

Read Lewis’ entire piece, published on Bloomberg.com, here. In case you’re interested, Lewis shares his source for O’Neal’s golf scores: the U.S. Golf Association web site. He also credits the Bespoke Investment Group with bringing them to public attention.

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