Friday, November 9, 2007
The Wall St. Journal's front page has a well-written, in depth story about the last two weeks in the tenures of Merrill's Stan O'Neal and Citigroup's Charles Prince, with a day by day account of the events that led to each being forced out of the executive suite. I found the description of how Citigroup uncovered the huge losses in its CDO portfolio, which had previously been thought to be low-risk, particularly revealing. According to the article, Citigroup executives met on a Saturday and began by reviewing Merrill's third quarter earnings report to figure out how it had valued its portfolio. As the extent of Citigroup's losses became apparent, Gary Crittenden, Citigroup's CFO, reportedly said:
"How in the world could we have been so exposed and how could we not have been properly hedged?"
Good question. WSJ, Two Weeks That Shook The Titans of Wall Street. Meanwhile, Charles Prince leaves with about $29.5 million in accumulated benefits and no severance pay. He will receive a prorated 2007 bonus. WSJ, No Severance Pay for Prince.