Irishman to help clear Merrill mess

No doubt Stan O’Neal is coming to terms with being ousted from Merrill Lynch this week thanks to the whopping $161.5m worth of benefits and stock options he’ll take away with him. Oh, and the personal assistant for three years.

O’Neal (above) is most definitely one of the first major SIV-positive (former) executives – the tag dreamt up by Wall Street wags to describe the most unstable structured investment vehicles that have thrown the credit markets into crisis.

The head of the former General Motors boss was offered on a platter to investors after the company posted a massive $2.24bn quarterly loss – its biggest ever. The firm also booked a $7.9bn charge in the previous quarter following the credit fall-out, ($4.5bn related to sub-prime related products) and some analysts expect it could have to take a further $4bn hit in the next quarter.

Media-shy, O’Neal had encouraged more risk taking from its trading operations as interest rates sank over the past number of years. It expanded into areas such as private equity and structured products and commodity trading. It seemed to be going so well. Last year Merrill Lynch posted earnings of $7.5bn. Then the bottom fell out of the structured finance market.

For some though, there’s a silver lining.

Merrill Lynch’s Ed Moriarty has been appointed to the newly-created role of chief risk officer.

An Irish citizen, it will now fall on Moriarty’s shoulders to assume responsibility for market risk, and “re-evaluating parts of our risk framework,” according to Merrill Lynch. That’s code for “getting the hell out of Dodge”.

“Ed’s promotion reflects the importance of deeper and more comprehensive risk management discipline under a single senior executive,” added Merrill Lynch on the appointment.

For Moriarty, the task must appear monumental. Graciously exiting all its structured investments in an orderly fashion isn’t going to be easy. If Moriarty manages to pull it off, he may even attain a Cicero-type status as the man who helped save Rome, or at least Merrill Lynch. Such accolades will not be easily won though.

A graduate of Clinton, New York-based Hamilton College, Moriarty has been a lifer at Merrill Lynch. Just where his Irish pedigree comes from is unknown, but it could, of course, extend back as far as grandparents.

Moriarty gave New York’s current mayor Michael Bloomberg one of his first big breaks, when the now billionaire turned up at Merrill Lynch’s office touting a new computer system that would offer traders functionality not available elsewhere. A Merrill Lynch executive said the company could do it itself, so Bloomberg offered to put together the system in six months and put Merrill Lynch under no obligation to buy if it wasn’t up to scratch. Moriarty agreed to the deal.

The next year will be a busy one for Moriarty as he tries to clear up the mess at Merrill. One suspects he’ll be in line for a tidy bonus if he does. No doubt more than enough to buy a handsome spread in Ireland from which to plot his retirement.

Meanwhile, those being tipped as candidates to replace O'Neal, include Kelly Martin, chief executive of pharmaceutical firm Elan. He left Merrill Lynch in 2001 to take up the Elan position as the company came close to collapse.

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