Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
Articles |The FORUM |Law Library |Videos | Fraudsters & Co. |File Complaints |How they STEAL |Search MSFraud |Contact Us
Nye Lavalle
By JENNY ANDERSON and LANDON THOMAS, Jr.
Published: October 26, 2007

Facing billions of dollars in losses from the subprime mortgage crisis, Merrill Lynch chairman and chief executive, E. Stanley O’Neal, floated the idea of a merger with a large bank, a foray that angered Merrill’s board and could cost him his job, according to people close to the beleaguered Wall Street firm.

Mr. O’Neal broached the possibility of a merger with Wachovia, the bank based in Charlotte, N.C., without first getting the approval of Merrill’s board, a major breach of corporate protocol at a time when directors were already concerned about the company’s performance, these people said.

Merrill’s board was so upset with Mr. O’Neal that it even discussed the names of potential candidates to replace him, according to people with knowledge of the board’s proceedings. Candidates who were discussed include Laurence D. Fink, chairman and chief executive of BlackRock, an investment firm partly owned by Merrill, and John A. Thain, chief executive of the New York Stock Exchange.

Jason Wright, a Merrill Lynch spokesman, said early today that there had been no contacts with any potential merger partners, but he declined to comment on whether there had been conversations with any banks. A Wachovia spokeswoman declined to comment. A Wachovia spokeswoman declined to comment.

The board’s reaction indicates that a merger with Wachovia is not likely for now. But the fact that the chief executive of Merrill, one of the most prominent investment banks, even made preliminary contact with Wachovia underscores how much the subprime mortgage crisis has rocked Merrill.

On Wednesday, Merrill reported a third-quarter loss of $2.3 billion and announced it would take a write-down of $7.9 billion on subprime mortgages and complex debt instruments, far more than the $5 billion it had predicted weeks earlier.

The sequence of events began late last week, according to people with knowledge of the discussions. Just days before a Merrill board meeting scheduled for Sunday, Mr. O’Neal called G. Kennedy Thompson, Wachovia’s chairman and chief executive, to float the idea of a merger, people briefed on the situation said. Mr. O’Neal inquired, “Would you be interested in having a conversation?”, according to a person briefed on their discussion. Mr. Thompson expressed interest in talking, while acknowledging the difficulty of the deal.

Mr. O’Neal, increasingly embattled with the bank’s growing loss, then directed Gregory J. Fleming, Merrill’s co-president, to follow up with Wachovia executives. Mr. Fleming has a close relationship with Mr. Thompson, and has represented him on many merger deals.

A merger could help Merrill weather the deepening crisis and make Wachovia a much more powerful financial player. Though less prominent, Wachovia has a higher stock market capitalization — about $86 billion, versus $52 billion for Merrill. Wachovia, which became the second-largest retail brokerage firm after acquiring A. G. Edwards, has been much less hurt by the recent market turmoil than Merrill, whose stock price has fallen to $60.90 a share from a 52-week high of more than $98.

Any merger between Merrill, with 15,000 retail brokers, and Wachovia, with 10,137 brokers, would likely face antitrust questions, and a deal would not likely be received well by Merrill’s brokers. In recent weeks, as the scope of the losses mounted, Mr. O’Neal has fired a number of executives, the latest round of firings he has made since taking the top job.

Merrill’s stock has fallen almost 10 percent in the past two days as Mr. O’Neal has come under intense criticism for what analysts called a complete risk management failure. With billions of dollars shaved off of its market capitalization and analysts convinced that an additional write-downs might be coming, Merrill is an attractive target.

Mr. Fink is widely considered to be the top candidate, should Mr. O’Neal depart. Merrill Lynch is a 49 percent shareholder in BlackRock, having merged its asset management business with Mr. Fink’s firm in 2006, a deal seen as one of Mr. O’Neal’s better strategic moves.
Quote 0 0
http://www.nytimes.com/2007/10/26/business/26merril1.html?_r=1&n=Top/Reference/Times%20Topics/People/T/Thomas,%20Landon%20Jr.&oref=slogin

Merrill’s Chief Is Said to Consider a Bid to Merge

NY Times Business
Quote 0 0
Merrill chairman expects to be ousted: report

26 October 2007 @ 10:09 am EST
 
Merrill Lynch & Co Inc Chairman and Chief Executive Stan O'Neal has told friends he expects to be ousted by the end of the weekend, CNBC television reported on Friday.

Merrill Lynch shares, down 35 percent this year, rose 6.6 percent, or $4, to $64.90 in early Friday trading on the New York Stock Exchange.

Merrill Lynch spokeswoman Jessica Oppenheim declined to comment on the report.

O'Neal is under fire from investors and employees after presiding over the company's biggest quarterly loss in its history. Merrill Lynch, the world's largest brokerage, wrote down $8.4 billion in the third quarter, mostly from bad bets on risky subprime mortgages and related securities.

The New York Times reported on Friday that O'Neal angered members of Merrill's board for floating a merger deal with Wachovia Corp without telling them.

(Reporting by Tim McLaughlin)
Read the full aticle of:
http://www.ibtimes.com/articles/20071026/merrill-lynch-oneal.htm
 
Copyright 2007 Reuters. All rights reserved.

Quote 0 0

Merrill Chairman Expects to be Ousted Soon

 
 TOP NEWS
Four Major Banks Borrow From Fed
Banks' Problem Mortgages Up 36 Percent
Mortgage Crisis Widens at Lenders, Banks
FDIC Keeping Close Eyes on Markets, Banks
 
 Related Stories
JC Flowers Joins List of Buyers for Northern Rock
Merrill Brokerage Head Emerges as CEO Candidate
Merrill Chairman Expects to be Ousted Soon
Countrywide Loses $1 Billion on Loan Loss, Writedowns
 
 
MoneyNews
Friday, Oct. 26, 2007

NEW YORK -- Merrill Lynch & Co Inc Chairman and Chief Executive Stan O'Neal has told friends he expects to be ousted by the end of the weekend, CNBC television reported on Friday.

Merrill Lynch shares, down 35 percent this year, rose 6.6 percent, or $4, to $64.90 in early Friday trading on the New York Stock Exchange.

Merrill Lynch spokeswoman Jessica Oppenheim declined to comment on the report.

O'Neal is under fire from investors and employees after presiding over the company's biggest quarterly loss in its history. Merrill Lynch, the world's largest brokerage, wrote down $8.4 billion in the third quarter, mostly from bad bets on risky subprime mortgages and related securities.

The New York Times reported on Friday that O'Neal angered members of Merrill's board for floating a merger deal with Wachovia Corp without telling them.

Story Continues Below

© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.

http://moneynews.newsmax.com/money/archives/articles/2007/10/26/095702.cfm?s=al&promo_code=3C08-1

Quote 0 0
Blossom wrote:
blossem am sorry I didn't read first and I notice after that you had posted the same thing first.Smurf
Merrill chairman expects to be ousted: report

26 October 2007 @ 10:09 am EST
 
Merrill Lynch & Co Inc Chairman and Chief Executive Stan O'Neal has told friends he expects to be ousted by the end of the weekend, CNBC television reported on Friday.

Merrill Lynch shares, down 35 percent this year, rose 6.6 percent, or $4, to $64.90 in early Friday trading on the New York Stock Exchange.

Merrill Lynch spokeswoman Jessica Oppenheim declined to comment on the report.

O'Neal is under fire from investors and employees after presiding over the company's biggest quarterly loss in its history. Merrill Lynch, the world's largest brokerage, wrote down $8.4 billion in the third quarter, mostly from bad bets on risky subprime mortgages and related securities.

The New York Times reported on Friday that O'Neal angered members of Merrill's board for floating a merger deal with Wachovia Corp without telling them.

(Reporting by Tim McLaughlin)
Read the full aticle of:
http://www.ibtimes.com/articles/20071026/merrill-lynch-oneal.htm
 
Copyright 2007 Reuters. All rights reserved.

Quote 0 0
Smurf,

                No problem.   

 

We're all putting info out here that may be useful to someone who needs it.  

Quote 0 0

 Thanks Blosson

Quote 0 0


Crunch claims victims at top and bottom of US society



Merrill Lynch's chief looks set to be next, says James Doran in New York

Sunday October 28, 2007
The Observer


Many thousands of people across America have lost everything they worked all their lives to build since the housing market crash and the sub-prime-related credit market disaster. Stan O'Neal, chief executive of Merrill Lynch, could be just the latest victim.

The Wall Street rumour mill was grinding away on Friday, writing O'Neal's obituary, well before confirmation that he was actually set to quit the bank. The revelation late on Thursday night that the Merrill chief had been in secret talks about a merger with Wachovia, a bigger but less well-known rival, seemed to be the final nail in his coffin.
The Merrill board was furious about alleged conversations with Wachovia chief G Kennedy Thompson, even though O'Neal had the bank's best interests at heart pursuing a mega-merger.

The board was also doubtless worried that O'Neal believes Merrill's troubles to be so severe that they are best fixed by giving up the bank's hard-won and long-lived independence.

The secret talks might not have been received so badly had they not been revealed so soon after O'Neal was forced to make one of the most embarrassing mea culpas in Wall Street history. Three weeks ago, he told an expectant market that the bank would take a $4.5bn hit on the marked-down value of certain debt-related securities on its books.

But then, this week, he was forced to admit that these tradeable bundles of debt, called CDOs, had actually lost some $7.9bn of their value, pushing the bank to report a quarterly loss of $2.3bn.

We all knew the write-down was going to be big. But it was not just the bank's balance sheet that was the problem - it was the fact that O'Neal seemed to have no idea about the scale of liabilities facing the world's biggest investment bank that so damaged his reputation. Now Larry Fink, the chief executive and founder of BlackRock, an asset management firm which is 49 per cent-owned by Merrill, is in line to take his job, one of the toughest on Wall Street.

O'Neal has come a long way from humble beginnings in Alabama. His forebears were slaves who worked in the cotton fields, while O'Neal started out at a General Motors car factory.

But he will doubtless not fall too far from his luxury Manhattan residence, should he be forced to go, while his $47m pay cheque will cushion the blow.

This crisis is far greater than O'Neal, or, indeed, all the CEOs on Wall Street. These troubles are being felt in every part of American society, and most dramatically at the poorest end.

On Bushwick Avenue in Brooklyn, less than five miles from O'Neal's luxury digs, lives James LeSure, a 64-year-old former deli worker. Like O'Neal, LeSure is from Alabama and his grandparents worked in the cotton fields. LeSure worked hard all his life to pay off the mortgage on a smart apartment building so he would have somewhere to live and, crucially, steady income during his retirement.

Like O'Neal, LeSure is having a rough time because of the housing downturn and the credit market crisis.But that is where the similarities end. LeSure's house is now in foreclosure. 'Everything I worked for is tied up here,' he said. 'This goes, then I got nothing.'

LeSure hopes that the expected downfall of O'Neal, someone in a position of power, will draw attention to his personal plight and that of many millions of other American homeowners.

The plight of homeowners has become such a serious concern that Congress is considering changes in the law to protect people like LeSure from foreclosure.

Yet more legal moves are in the works to allow those who lose their homes to sue big banks, such as Merrill Lynch, whose thirst for profit from tradeable securities, linked to ordinary mortgages, helped create the crisis.

As Wall Street wakes up to another week of uncertainty tomorrow, O'Neal, if he hasn't resigned already, will face the music. LeSure, meanwhile, will muster the strength to continue his long legal battle to save his home and life savings.

In these days of financial uncertainty, life at the top and at the bottom of the heap is motivated by the same root cause. And, until policy-makers recognise the inextricable link between men such as O'Neal and LeSure and what they represent, the economic crises we suffer today will not be resolved.

http://observer.guardian.co.uk/business/story/0,,2200439,00.html


Quote 0 0

http://www.bloomberg.com/apps/news?pid=20601109&sid=aRXuxfz7uTE8&refer=news

By Bradley Keoun

Oct. 16 (Bloomberg) -- When Merrill Lynch & Co. paid $1.3 billion for subprime lender First Franklin Financial Corp. 10 months ago, Chief Executive Officer Stanley O'Neal promised ``revenue velocity.'' What he got is a dead weight with decelerating earnings.

Dwindling income from First Franklin and the $5 billion writedown Merrill incurred for the third quarter mean Wall Street's biggest brokerage has no chance of fulfilling Chief Financial Officer Jeffrey Edwards's April estimate of as much as $700 million in annual revenue from underwriting subprime mortgages and repackaging them into bonds.

Investors who lauded the 56-year-old O'Neal for pushing New York-based Merrill to make higher returns now question whether he adequately policed the risks. They're also second-guessing his self-described ``disciplined and selective'' track record for takeovers.

Confidence in O'Neal is ``certainly shaken,'' said Adam Compton, an analyst who helps manage $150 billion at RCM Capital Management in San Francisco, which owned about 800,000 Merrill shares at the end of June.

Merrill's stock is the third-worst performer in 2007 among securities firms after E*Trade Financial Corp., which had home- loan losses at its online bank, and Bear Stearns Cos., where two hedge funds lost $1.6 billion of clients' money. Merrill is down 21 percent in New York trading. Goldman Sachs Group Inc., the biggest securities firm by market value, has gained 15 percent. No. 2 Morgan Stanley is down 2.2 percent. All the companies are based in New York.

Komansky's Legacy

Not since Russia defaulted on its debt and the collapse of hedge fund Long Term Capital Management in 1998 have the credit markets suffered so many dislocations. The world's largest financial institutions have written down more than $21 billion of mortgages, securities and corporate loans whose value plummeted during the third quarter.

Merrill said Oct. 5 that it lost as much as 50 cents a share in the quarter ended Sept. 28, the firm's first loss in almost six years. The complete financial report is scheduled for release next week.

The loss is O'Neal's biggest misstep since he became CEO in 2002. He has criticized acquisitions made under his predecessor, David Komansky, whose expansion culminated in a $1.7 billion charge in the fourth quarter of 2001, a record in the firm's nine-decade history. That's now dwarfed by O'Neal's third- quarter subprime-induced blunder.

O'Neal declined to comment. He said in a statement earlier this month that he was ``disappointed in our performance'' and promised to ``do a better job in managing this risk.''

Subprime Market

Loan brokers at 1st Metropolitan Mortgage, a division of Montvale, New Jersey-based Empire Equity Group Inc., attest to how slow it's gotten at First Franklin. For the past five years, they've turned to First Franklin whenever they had a client who recently emerged from bankruptcy, said Brenda Jarvis, director of lender relations in 1st Metropolitan's Charlotte headquarters.

``They were definitely the go-to lender for that type of borrower,'' Jarvis said. Her company has 1,600 employees and 250 offices in 49 states.

First Franklin was the 10th-biggest subprime lender in 2006, with $27.7 billion of loans, according to data compiled by industry publication Inside Mortgage Finance. The San Jose, California-based firm had 2,800 employees when Merrill bought it.

Now, 1st Metropolitan sends less than $1 million of loans to First Franklin a month, down from $10 million six months ago, Jarvis said. First Franklin barely offers subprime loans anymore. Instead, it's competing for less-risky borrowers or those willing to make bigger down-payments. On these safer ``prime'' or ``near-prime'' loan offerings, First Franklin's prices are often undercut by banks with bigger-scale operations, she said.

Bad Timing

``First Franklin has basically changed the way they do business,'' Jarvis said. ``They're pretty much non- competitive.''

William Dallas, who co-founded First Franklin in 1981 before selling it in the 1990s, said his friends at the company are virtually idle. Merrill spokesman Bill Halldin declined to comment on First Franklin, which announced an unspecified number of job cuts last month.

More than 110 mortgage companies, many of them subprime lenders, have closed, filed for bankruptcy or put themselves up for sale since the start of 2006. Investors are refusing to buy bonds backed by subprime loans.

``First Franklin was a business that was bought at almost precisely the wrong time,'' said Brad Hintz, a New York-based analyst at Sanford C. Bernstein & Co.

The slowdown flows through to Merrill's business of packaging loans, bonds and other types of assets into securities and other debt instruments known as collateralized debt obligations, or CDOs.

Slowdown in Underwriting

After Merrill announced the First Franklin deal, O'Neal said at an investor conference last November that the takeover ``will help provide an additional attractive source of origination for our mortgage-backed securitization and trading platform, enhancing revenue velocity relative to assets and thereby increasing returns.''

Edwards told investors in April after Merrill reported first-quarter earnings that First Franklin's sales and fees from underwriting bonds linked to subprime mortgages accounted for as much as $170 million of revenue per quarter on average.

Merrill underwrote $8.1 billion of asset-backed securities in the third quarter, down from $15.6 billion a year earlier and $17.3 billion in the third quarter of 2005, according to data compiled by Bloomberg. The figure was far short of the $28.6 billion Merrill sold in the second quarter of 2007.

`Got to Deliver'

``A recovery for Merrill's fixed-income business will be challenging,'' JPMorgan Chase & Co. analyst Kenneth Worthington wrote in an Oct. 8 report. He downgraded the stock to ``neutral'' from ``overweight.'' Credit Suisse Group analyst Susan Roth Katzke on Oct. 8 cut her estimate for Merrill's 2008 earnings by 12 percent.

Since O'Neal became CEO on Dec. 2, 2002, Merrill's stock has increased 69 percent, exceeding a 65 percent gain by the Standard & Poor's 500 Index. Goldman almost tripled during the period, while Lehman Brothers Holdings Inc. doubled, and Bear Stearns rose 89 percent. Morgan Stanley advanced 76 percent.

Some investors buy Merrill's stock because a third of its revenue comes from its network of 16,200 retail brokers whose fees are more stable than the erratic gains that come from trading and investment banking.

Such confidence may be in doubt after Merrill was the only one of its peers to post a third-quarter loss, said Ken Crawford, who helps oversee more than $900 million at St. Louis- based Argent Capital Management, including about 140,000 Merrill shares.

``If you're going to play that game, OK, but then you've got to deliver returns more similar to Goldman's,'' Crawford said.

Modern Risk

In an e-mailed video message to employees on Oct. 5, O'Neal said the firm has to take risks if it wants to compete. ``I don't think there's a choice in the modern capital markets for firms like us not to take risks,'' he said. In the Oct. 5 statement, Merrill said each of its largest businesses except fixed-income trading had third-quarter revenue growth of at least 20 percent.

The net loss includes $100 million of costs to write off ``identifiable intangible assets'' such as customer lists associated with First Franklin. Merrill cited U.S. accounting rules in deciding not to book the rest of the investment as a loss.

The decision may make Merrill's assets look artificially high, dragging down return on equity, said Robert Willens, an accounting analyst at Lehman in New York.

``If this is an unproductive asset, it's going to wreak havoc with the return on equity,'' Willens said.

The Fallen

The financial ratio, a gauge of profitability, was so crucial to Merrill's board of directors that they linked O'Neal's compensation to it. Under that ``incentive program,'' O'Neal got an extra $9.4 million for his part in boosting Merrill's return on equity to 21.3 percent in 2006 from 16 percent in 2005. He has increased the measure from 7.5 percent in 2002.

Merrill's return on equity will be 14 percent this year, compared with 27 percent for Goldman and 23 percent for Morgan Stanley, Hintz estimates.

Investors may forgive O'Neal partly because so many of his rivals took writedowns in the third quarter. He's been less forgiving of subordinates who have crossed him or fallen out of favor. The list includes former rivals, such as Jeffrey Peek, now CEO of New York-based CIT Group Inc., the largest independent commercial-finance company in the U.S., as well as onetime allies, including Arshad Zakaria and Thomas Patrick.

On Oct. 3, Merrill fired Osman Semerci, the firm's fixed- income chief, who had occupied the post for just over a year, along with Dale Lattanzio, one of his top two deputies in the U.S.

`That Bubble'

O'Neal earned his way through college by spending alternate semesters working at a General Motors Corp. assembly plant in Georgia. He got a master's degree from Harvard Business School in 1978 and worked as a finance executive at General Motors before joining Merrill as an investment banker in 1986. He was promoted to president in July 2001. Merrill is a passive, minority investor in Bloomberg LP, the parent of Bloomberg News.

Komansky had used acquisitions to expand into stock- oriented businesses across the world, including the $5.2 billion purchase of London-based Mercury Asset Management Group Plc in 1997 and the $781 million takeover of Canada's Midland Walwyn Inc. in 1998. Earnings plummeted 85 percent in 2001, when the Nasdaq Composite Index fell 21 percent and terrorists attacked the U.S. on Sept. 11.

``We expanded into that bubble more than any other firm,'' O'Neal said in a 2006 interview with Euromoney.

Deep Plunge

He promised not to make the same mistake. After becoming CEO, he refrained from major acquisitions until 2004, when he bought Entergy-Koch LP's energy-trading business for $800 million. The unit, which trades oil, natural gas, electricity and metals, produced $1 billion of revenue last year. Merrill described it this month as ``perhaps the most successful acquisition in the company's history.''

``We've been disciplined and selective,'' O'Neal said at an investor conference in November 2005. ``For every deal we've done, we've probably passed on 10 or 15 others.''

Thirteen months later, Merrill bought First Franklin, plunging deeper into the business of underwriting asset-backed securities. Industrywide, fees from the securities had tripled over five years to $5.6 billion in 2006, based on estimates by Bank of America Corp. analyst Michael Hecht.

Since then, the percentage of subprime borrowers making late payments has climbed to about 15 percent from 12 percent a year earlier.

``People are going to look at O'Neal more closely,'' Argent's Crawford said. ``You only get a few mulligans, and he has spent one.''

To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net .

Last Updated: October 16, 2007 00:09 EDT



Quote 0 0
Write a reply...