Hanging The Public

Merrill Lynch prides themselves on helping the individual and making their first priority the client relationship. Quoting from their website, five abiding principles they stand for are: "Client Focus, Respect for the Individual, Teamwork, Responsible Citizenship, and Integrity." Those might have been the founding principles that built this corporation but after the stock market crash of 2008, shareholders probably thought of a few other words that would describe Merrill Lynch's principles: money hungry. 


In 2007, Merrill Lynch (will be referred to as ML from this point) had an average stock price of $84.88. After the crash, the lowest price I could find was $17.05 in 2008. Since January 1st, 2009,  ML has been purchased by Bank of America, stock has been fluctuating but hasn't dipped below the double digits (yet). 


ML's revenue and profit in 2007 was 70 million and 7.5 million respectively. They were #70 on Fortune 500 Global that year. In 2009, a year after the stock market crash, revenue and profit were 16.8 million ( -73.9% from 2007!) and negative in profits by 27.6 million dollars. What a difference 2 years makes right?


ML did receive TARP (Troubled Asset Relief Program) Funds from the US government (from taxpayers) to help strengthen the financial market for 2008. How much? 15 BILLION (yes with a B) dollars. But Bank of America also received TARP funds as well so even more billions were acquired...


ML was heavily involved in subprime mortgages after seeing how other financial institutions were making so much profit and wanted to also increase their profit. ML started to bundle and repackage loans, debts and mortgages in loans (securitization) and then sold it to investors for a certain risk, and profit. But as we now know that didn't end so well.


But the most amazing information I found was that ML usually gives bonuses in late January/early February. But on December 29, 2008, 3 days before the Bank of America buyout, ML distributed $4 Billion dollars in bonuses. Quoting from a NYTimes article, "11 of the bank’s top executives received more than $10 million in cash and stock, ....The bonus payouts for Merrill’s 10 highest-paid total $209 million in cash and stock in 2008, compared with the $201 million shelled out to the top 10 in 2007, according to The Journal." Attorney general of New York, Andrew M. Cuomo who was investigating the bank's questionable distribution of bonuses "made it clear that the bulk of the bonuses were paid to a small portion of Merrill Lynch’s 39,000 employees."  Though from the same NYTimes article, "Thomas Montag, Merrill’s head of global sales and trading, received a  $39.4 million pay package and Merrill stock awards valued around $50 millionAndrea Orcel, a top Merrill banker now leading Bank of America’s international corporate and investment banking division, who took in $33.8 million".


Merrill Lynch used to stand for catering to the individual, making their financial future stable but by the articles I read and by the numbers, I must focus on the words used to. Now it seems financial bigwigs are only looking out for themselves and their personal bank accounts.


For more on the shady-ness of Merrill Lynch I found a super interesting article on NPR:
here.


Sorry this post is so late, I consumed a lot of chocolate bunnies today.


A.B