Crash of the Titans: Greed, Hubris, the Fall of Merrill Lynch, and the Near-Collapse of Bank of America

by Greg Farrell

The intimate, fly-on-the wall tale of the decline and fall of an America icon With one notable exception, the firms that make up what we know as Wall Street have always been part of an inbred, insular culture that most people only vaguely understand. The exception was Merrill Lynch, a firm that revolutionized the stock market by bringing Wall Street to Main Street, setting up offices in far-flung cities and towns long ignored by the giants of finance. With its “thundering herd” of financial advisers, perhaps no other business, whether in financial services or elsewhere, so epitomized the American spirit. Merrill Lynch was not only “bullish on America,” it was a big reason why so many average Americans were able to grow wealthy by investing in the stock market. Merrill Lynch was an icon. Its sudden decline, collapse, and sale to Bank of America was a shock. How did it happen? Why did it happen? And what does this story of greed, hubris, and incompetence tell us about the culture of Wall Street that continues to this day even though it came close to destroying the American economy? A culture in which the CEO of a firm losing $28 billion pushes hard to be paid a $25 million bonus. A culture in which two Merrill Lynch executives are guaranteed bonuses of $30 million and $40 million for four months’ work, even while the firm is struggling to reduce its losses by firing thousands of employees.Based on unparalleled sources at both Merrill Lynch and Bank of America, Greg Farrell’s Crash of the Titans is a Shakespearean saga of three flawed masters of the universe. E. Stanley O’Neal, whose inspiring rise from the segregated South to the corner office of Merrill Lynch—where he engineered a successful turnaround—was undone by his belief that a smooth-talking salesman could handle one of the most difficult jobs on Wall Street. Because he enjoyed O’Neal’s support, this executive was allowed to build up an astonishing $30 billion position in CDOs on the firm’s balance sheet, at a time when all other Wall Street firms were desperately trying to exit the business. After O’Neal comes John Thain, the cerebral, MIT-educated technocrat whose rescue of the New York Stock Exchange earned him the nickname “Super Thain.” He was hired to save Merrill Lynch in late 2007, but his belief that the markets would rebound led him to underestimate the depth of Merrill’s problems. Finally, we meet Bank of America CEO Ken Lewis, a street fighter raised barely above the poverty line in rural Georgia, whose “my way or the highway” management style suffers fools more easily than potential rivals, and who made a $50 billion commitment over a September weekend to buy a business he really didn’t understand, thus jeopardizing his own institution. The merger itself turns out to be a bizarre combination of cultures that blend like oil and water, where slick Wall Street bankers suddenly find themselves reporting to a cast of characters straight out of the Beverly Hillbillies. BofA’s inbred culture, which perceived New York banks its enemies, was based on loyalty and a good-ol’-boy network in which competence played second fiddle to blind obedience.Crash of the Titans is a financial thriller that puts you in the theater as the historic events of the financial crisis unfold and people responsible for billion of dollars of other people’s money gamble recklessly to enhance their power and their paychecks or to save their own skins. Its wealth of never-before-revealed information and focus on two icons of corporate America make it the book that puts together all the pieces of the Wall Street disaster.

Genres: Business, Finance, Economics, Nonfiction, History, Banks, Banking

482 pages, Kindle Edition

First published January 1, 2010

Reviews

[Paul · Rating 3 out of 5]

This was my version of a good, trashy novel. Though, at first, this book may carry an air of intimidation, since it was a 500 page book about the recent economic crisis, it was refreshingly a book that centered more on the main characters within that historical moment than cold, hard stats and textbook descriptions of impersonal social forces. The book dramatizes the back-room drama between men with inflated intellects and ego. The writing is pretty cheesy with its flowery descriptions that lionize these morally questionable or despicable men of wealth, but it was easily digestible and emotionally engaging. But the one thing I wished the book conveyed more was how the reckless, opportunistic choices made by these men had a profound effect on the life prospects of millions of other people. It is always juicy to read stories of power struggles between very smart, very confident, and very colorful people. But this story is bigger than just the dozens of men walking through floors of Wall Street. It is exciting to read the risks and bets made by these men, but only to realize that when you step back from the book, which is myopic to only the drama of these financial titans, this small cult of men wielding enormous power are selling or gambling the livelihood of countless people for personal gain or glory. If only this was fiction.

[Seth Mitra · Rating 5 out of 5]

A highly informative and engaging book which takes an investigative approach to uncover the events that lead to the fall of the once mighty investment bank Merrill Lynch.
The author's journalistic tone infused with his engaging narrative, provides us with a brilliant account of how greed, pride and ignorance can often cloud our better judgement even in the face of calamity , and that was what caused the collapse of such a great institution.
The author also does a decent job at maintaining a steady sense of suspense and intrigue with the book's fast paced thriller like feel.
All in all it's a great book and I would definitely recommend it to anyone who is interested in a deeper understanding of the of 2008 financial crisis, especially the reason behind Merrill Lynch's downfall.

[Joe · Rating 2 out of 5]

Good view of the personalities involved, but lacked any explanation of the situation — ie what caused these banks to lose so much money, why couldn’t Myrell Lynch have remained independent, etc. — which thus makes it impossible to form an independent opinion.

Also, the book was clearly built on sources from 2-3 people, so it reads as pretty lopsided.

[Leslie · Rating 4 out of 5]

Very interesting read, but probably because I work for Bank of America and watched all of this go down from a different perspective.

[Navdeep Pundhir · Rating 4 out of 5]

One of the best books written on 2008 crisis, which was not necessarily focused on the markets falling everyday. A very, very Well stitched narrative! 4.5 stars to be honest!

[Bob Pearson · Rating 3 out of 5]

Greg Farrell falls short of objectivity in this otherwise great account of a now famous saga of hubris and miscalculation during the Great Recession. Apparently trying to top his predecessor CEOs at Bank of America in growing the company, Ken Lewis in 2008 bought both Countrywide Financial and put together a takeover of Merrill Lynch, hit hard by the market panic that year. Prior to BofA's acquisition, Merrill Lynch had hired John Thain as its CEO to save the firm and avoid a forced sale. Thain failed to save Merrill, and Lewis' two great leaps to take in Countrywide and then Merrill cost BofA tens of billions of dollars. The fiasco also cost both men their jobs. According to Farrell, both appeared to have badly mismanaged news damaging to their firms, engendering fierce public and government reaction. Lewis got the worst of it; he's never been rehired. Thain was hired in 2010 as CEO of a middle market financial holding company after it emerged from bankruptcy in late 2009. There are enough villains to satisfy anyone's curiosity here and too few heroes. However, in telling the story, Farrell decided to pick favorites among his many sources and inserted his own judgments into his narrative. He opts to make Merrill Lynch a victim, even going so far as to absolve Thain for the failure to keep his firm from being sold. Through the book, there is a troubling condescending tone about BofA and the "hillbillies" from Charlotte, NC daring to play in the big leagues of the New York banking and investment world. Too bad Farrell couldn't have gone back over his final draft one more time.

[Frank Kelly · Rating 4 out of 5]

An outstanding study of the personal frailties and leadership failures that led to the collapse and sale of Merrill Lynch to Bank of America. I knew many of these folks well from my time at Merill Lynch. And I knew several of the senior Bank of America executives covered (but not in glory) in the book. I had to put the book down in a number of circumstances because it was so painful to read -- but it was correct and very illuminating.

What were all these people thinking? How did they allow this all to happen? At least this book will stand as a reminder and a lesson to others (hopefully) in generations to come that making money does not equal leadership. Nor does it mean success.

[Wendy · Rating 4 out of 5]

Wow, that was a fun read with all the suspense and plot twists of a Dan Brown novel. You can tell (by how good or bad they come across) which people featured were the main sources for the author, and it made me wonder about how the telling would have come across if told from other peoples' viewpoints.

A very interesting look at modern corporate culture and what the economic meltdown looked like from inside Wall Street.

[Jen O'Leary · Rating 5 out of 5]

Fantastic book by a great storyteller who puts you inside the room

The fall of Merrill Lynch was a tragedy. Crash of the Titans recreates the events as if you were in the room for every pivotal and dramatic moment. A true page turner where you are torn between the dynamic of not wanting to put the book down and the disappointment that each page brings you closer to the end. It has everything you can ask for in a great story about American business

[Kamlesh Gandhi · Rating 5 out of 5]

He best in the matter till date.
Lucid, detailed and like a bizarre movie
Recounts many events and details, personalities and the downfall of many including an age old respected institution whose down fall was the greed and hubris, Wall Street avarice .
No one could told this better than the author

[Ganapathy · Rating 4 out of 5]

The book paints an alarming portrait of the cavalier attitude of the finance industry when it comes to risk. There is a fine line between calculated risk and recklessness. That line was erased long ago. Leaders in the industry were too arrogant to see what was coming. When the data was presented, they refused to believe it. Three things I found to be fascinating: (1) an industry that prides itself on math (“numbers game”) and logic heavily relies on “perception and confidence” i.e. emotional states. When John Thain wanted to increase the purchase price, his advisors warned him that BofA will walk away because of his “over confidence and arrogance”. Are they emotionally fragile like that? Can they not say no and renegotiate? An attitude like that can easily spell doom for not just finance but any industry, (2) well, it’s the reflection of the first point. When BofA is willing to buy Merrill for $29 a share ($50 billion deal), Thain says let’s make it $30. It’s a good round number. So, there is no math or logic behind it other than “it’s a good round number”. His advisors rightly point-out that $50 billion is also a good round number, and (3) Bonuses. Even when the ship is going down, the job cuts were made based on how much bonus money can they get from downsizing. Sure, it may make business sense for “attracting talent and incentivizing risks” but when the global financial system is at the brink of collapse and people are trying to survive, bonuses seem to be last thing that should come to mind. Overall, the book is an excellent portrayal of the 2008 financial crisis and how did the major firms survive.

[Ben · Rating 5 out of 5]

Crash of the Titans does an amazing job at telling the tumultuous events leading to the downfall of Merrill Lynch. But in addition to just the downfall of Merrill Lynch and the bumbling idiots left with the power to sink a company it describes the efforts to save and revitalize Merrill Lynch before an inevitable doom that led to its absorption by Bank of America. Aside from just detailing the events and downfall it details how that absorption by BofA led to an almost similar collapse within BofA. The story does an amazing job at encapsulating not only the two major players in this story but the marketplace attitude, government cooperation and response, as well as the economic conditions that led to this heinous downfall, because as this story makes it clear this accident isn't isolated it's an event in a much larger overarching event that was the 2008 financial crisis. I think the author Greg Farrell does an amazing job at turning what may look like a boring economics and financial story into something that reads like a novel and I often think that is a huge indicator of good writing, because of this I think it deserves five stars. It artfully tells a confusing story and confusing concepts such as treasury relief programs and CDO's. Although there are so many players in this story to follow and so many new harrowing developments that each day becomes worse than the next I found that the book was expertly written in a way that minimizes confusion and leads the reader to see the true picture of Merrill Lynch and draw what they feel out of the book.

[Sipho · Rating 4 out of 5]

This book is the inside story of how Merrill Lynch, the famed investment bank, collapsed and was eventually bought out by Bank of America. The author goes beyond the superficial conclusion that the bank was merely a casualty of the 2008 financial crisis but examines how a single-minded focus on profits was the catalyst for the downfall of the firm and many others.

The reason everything almost came crashing down in 2008 was 25 years of nonstop focus by corporate executives on their bonus checks. Lehman Brothers, AIG et al went out of business because they kept doing risky real estate deals simply to garner easy money.

Farrell focuses on several key figures within Merill: CEO until 2007, Stan O'Neal; John Thain, the man brought in to steady the ship as the crisis bit and the man who, while also committing several grave errors, eventually sold Merrill Lynch and Greg Fleming, who was the President of the firm and purported voice of reason through much of the madness.

Its a gripping read. Extremely well written and easy to follow; a real page turner if you're interested in corporate governance and economics or if you just need more reasons to get behind the "eat the rich" mantra.

[Bethany · Rating 3 out of 5]

I like learning about all the nuances of the 2007-2009 housing market crash. In addition to just the travesty of it, it shed so much light on how the finance world is run and the leadership of it. The fall of Merrill Lynch is one such casualty. And I think more than anything we can chalk it up to hubris and poor leadership. The author was very passionate and thorough in his research and presents the information neutrally so that you can come to your own conclusions, but he provides his feelings in the epilogue.

[Vedant Agrawal · Rating 4 out of 5]

A great read for anyone working in the banking industry.

Brilliantly narrated the story of how Merill Lynch sold itself at a hefty premium to BofA in the midst of the Global Financial Crisis, though being a part of Bank of America, it felt uncomforting.

Great insights into the personality of Wall Street bankers, specifically top-level executives.

It will certainly help the reader in navigating through the waters on Wall Street.

[Kevin Ho · Rating 5 out of 5]

detailed but very readable recollection of the demise of ML

Very enjoyable book. Detailed to the point that you wonder how the author even got this information and wonderfully written and tone and content to keep you reading. Really enjoyable. Would have been good to learn more about Ken Lewis but I'm guessing he wasn't as forthcoming as some of the other characters in the book

[james fox · Rating 5 out of 5]

Late storey of the firm. From 1950 to 1975 just as important, How honest old timers lost out to greedily MBA's. Donaldson Reagan started the change and character of Mother Merrill.

Merrill and later top officers finished the ruination of a fine firm. They did a job on me and others.

[Tom Mahan · Rating 3 out of 5]

Although this was just my kind of book, an expose of all the back room dealings that caused a huge company to destroy itself, this one was just not that good. Far too much time was spent on backstory and leadup to the actual events. For a better book in this genre, look into the Enron or Bear Stearns stories.

[Sarah Rogers · Rating 4 out of 5]

4.5 stars. This book is very, very well-researched and quite detailed - I cannot deny the work that Farrell put into it. I read it for more of a business acumen perspective and it was very good from that point of view, but I can’t say I will be recommending it as a fun read for anyone. I do wish he touched more on the BofA’s acquisition of Countrywide and the housing crisis.

[Anna Borngen · Rating 4 out of 5]

Great book full of insight into the financial industry during the downturn and crash of Bear Sterns, Lehman Brothers, and all the banks that toppled with them. I wasn’t expecting as much history of Bank of America as I got, but you can see that as a bonus or a distraction.

[Brendan · Rating 3 out of 5]

A story worth reading. The writing is a bit repetitive. For someone not with a finance background, there's a lot of numbers thrown around in the $ million/billion dollar range in the beginning that don't have much context until much later in the "story". Rounded up from a 2.5 to 3 stars.

[Subjuntivo Subjuntivo · Rating 5 out of 5]

I enjoyed this book, to my own surprise.
I would honestly like to know, however, how much of the "data" is actually so, how much of the conversations and so really happened that way, or the author is somehow novelizing the ideas.

[Jeremy Davis · Rating 3 out of 5]

Repetitive at times, over focused on the c-suite and unnecessary details like drink choice. This book could be shorter but good insights into how corporate America operated during the financial crisis.

[Ann Loper · Rating 5 out of 5]

Great Sad Account

Well written financial read. I highly recommend especially if you have ties to Merrill Lynch or BofA. You will recognize many of the players from those dark financial days of 2008.

[Abbie Sanford · Rating 5 out of 5]

Enjoyed

I really enjoyed the book. The author gives a detailed look into the behind the scenes during the financial crisis.

[Vinothraj · Rating 5 out of 5]

Engaging slice of of the 2008 crisis, with well-woven back-stories.

[David P · Rating 4 out of 5]

Very pleasant to read, lots of interesting little stories that paints characters well. And seems only Wetzel was painted in most positive light. Lol

[Tanya Hurst · Rating 5 out of 5]

Most excellent account of what occurred with Merrill Lynch and B of A during the financial crisis. Well researched, well written, and overall a great book. Definitely recommend!

[Olga Vannucci · Rating 5 out of 5]

You take on risk in good times,
You're a genius, say all,
But when the times turn hard,
That risk will be your fall.

[Andrew · Rating 4 out of 5]

Bonus driven revenues poor long term foresight and considerable lack of fiduciary responsibility to share holders is a perfect storm to see this come to pass.

Greg does a great job of tying together all the pieces to tell a great story of the tumultuous years of 07 to 09