Greg Farrell “Crash of The Titans: The Fall of Merrill Lynch and the near collapse of Bank of America” Crown Business, 2010, 464 Pgs

Author Greg Farrell is a correspondent for the Financial Times. In January 2009, he broke the news that Merrill Lynch had paid out its 2008 bonuses a month ahead of schedule, in December, even though Merrill was in the process of losing $28 billion for the year, and Bank of America needed an extra $20 billion in taxpayer funds to complete its acquisition of the firm. That story sparked an investigation by New York attorney general Andrew Cuomo (who was elected governor of New York on Nov. 2, 2010).

As the book points out, one firm always stood apart from the rest of Wall Street: Merrill Lynch.  It was Merrill Lynch that set up offices across the U.S. and solicited business from the little fella (that be me).  Because of Merrill Lynch, many ordinary middle class people were able to invest in the market and many average Americans became relatively wealthy doing so.  And then Merrill Lynch collapsed, the topic of this book, and is now the investment banking and wealth management division of Bank of America.  Farrell's book concentrates on three CEOs:  Thain, his predecessor at Merrill Lynch, E. Stanley O'Neal, and Ken Lewis of Bank of America.

Most interesting and frightening is the exhibited culture of Wall Street: 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. The whole reason everything came crashing down in 2008 was twenty-five years of nonstop focus on compensation through bonus checks—checks based on short term returns.   They kept doing real estate deals long after the market had turned. It produced bigger bonuses for them. The book reads like a thriller—it factually chronicles the wreck.  Interestingly, the merged financial behemoths are now even bigger and the culture is unchanged.