Requiem for Old School Capitalism

Winthrop Smith — son of one of the original partners of Merrill Lynch Pearce Fenner and Smith — gave an occasionally angry eulogy for Merrill Lynch at the shareholders meeting that was to approve ML being sold to Bank of America:

Today did not have to come. In the past it was Merrill Lynch that came to the rescue of Goodbody, White Weld and Becker. It was Merrill Lynch that strong and successful firms like Fenner & Beane, CJ Devine, Smith New Court, DSP in India, Midland Walwyn in Canada and Mercury Asset Management wanted to join. Merrill always thrived in times of turmoil and grew market share. Today did not have to come.

Today is not the result of the sub-prime mess or synthetic CDOs. They are the symptoms. This is the story of failed leadership and the failure of a Board of Directors to understand what was happening to this great company, and its failure to take action soon enough.

I stand here today and say shame to both the current as well as the former Directors who allowed this former CEO to wreak havoc on this great company.
Shame on them for allowing this former CEO to consciously and openly disparage Mother Merrill, throw our founding principles down a flight of stairs and tear out the soul of the firm.

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Shame on these Directors for allowing this former CEO to rid the firm of thousands of years of experience. Shame of them for allowing this former CEO to surround himself with many people who did not have the perspective of other market cycles and the experience of time. Shame for allowing this CEO to surround himself with many people who did not share the same values that made us great and appreciate our winning culture. Shame on them for allowing this CEO to cut costs and businesses so severely and bluntly for the sake of short term earnings that he cut out future growth. Shame on them for allowing him to over leverage the firm and fill the balance sheet with toxic waste to create short term earnings.

Shame of them for allowing good people like Dan Bayly and a few others to be used as scapegoats to settle the US Government’s Enron case against Merrill Lynch and for allowing these wonderful human beings and loyal Merrill Lynchers to go to Federal Prison unjustly. Fortunately, the Court of Appeals overturned the sentence. Shame on them for not knowing the Merrill Lynch helicopter and plane and other perquisites were being used irresponsibly.

Shame, shame, shame for allowing one man to consciously unwind a culture and rip out the soul of this great firm. Shame on them for allowing this former Stan O’Neal to retire with a $160 million retirement package and shame on them for not resigning themselves.

I am not alone in these sentiments. So many former and present Merrill Lynchers share this anger – this sadness about what was allowed to occur. Just this week a former Merrill Lynch senior women executive emailed me and said, ‘It is heartbreaking to see what greed and the absence of principles did to MER, one of the finest companies in America’.

What breaks my heart even more is to see the financial damage that has been inflicted on so many families that devoted their life to the Firm and to all our stakeholders.

Where is the accountability ? No wonder that the Main Street that learned to trust Merrill Lynch in the 1940’s has lost faith in Wall Street in 2008. Merrill Lynch is not alone in this. But in the past Merrill Lynch rose above the crowd and distanced itself from the greed that brought others down. Our principled leaders steered us through many challenges, and we emerged stronger because of them.

Read the whole thing. It is pretty moving, giving you an idea of what just got lost and the kind of mindset and greed that would piss away an American institution. A mindset that is not an anomaly. ML was not a perfect organization by any stretch, but Win Smith speaks for the kind of value that used to be very important to the creation of American wealth.