Shadow Government, Shadow Management
Two indispensable members of Mr. O'Neal's clique were Osman Semerci, who, among other things, ran Merrill's bond unit, and Ahmass L. Fakahany, the firm's vice chairman and chief administrative officer. A native of Turkey who began his career trading stocks in Istanbul, Mr. Semerci, 41, oversaw Merrill's mortgage operation. He often played the role of tough guy, former executives say, silencing critics who warned about the risks the firm was taking.
Two years later, Merrill Lynch crashed, burned and was forced to merge with Bank of America. O'Neal, Semerci, Fakahany and hundreds of others are gone. Stockholders are screwed. "It was an ignominious end to America's most famous brokerage house," Morgenson wrote, "whose ubiquitous corporate logo was a hard-charging bull."
These guys weren't making cars. Nor were they making it possible for cars to be made, which is the business they were supposed to be in.
They were making bets.
I spent some years as a lowly marketer running book clubs. I dealt with bad debt, wrote and designed billing and dunning efforts, and was very careful to cut off members who failed to pay.
If one of these hotshot honchos said to me, "Hey, we're building a huge industry that's going to make us a lot of money based on irresistible offers to customers who won't be able to pay their bills! Do you want to get in on the action?" I would say, "You're all out of your [expletive deleted] minds!"
It's now my opinion that some kind of shadow government should be set up to oversee the operations of individual companies—and entire industries.
As it stands now, the only shadow government of a corporation is its board of directors.
In the case of Bear Stearns, Lehman, Goldman, Fannie and Freddie, AIG, and Merrill Lynch, the directors failed to give guidance based on business common sense. My bet is the directors didn't have a clue what was going on and were gulled into believing management's rosy scenarios.
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