Merrill/Bank America Departures
Two heavy hitters have departed Merrill Lynch (or, as it is now called, Bank of America ): David Rosenberg, the chief North American economist for Merrill, and Richard Bernstein, their chief investment strategist.
Rosie is returning home to Canada where he is joining Gluskin Sheff & Associates in Toronto; Bernstein is starting his own money management company.
Here is the official announcement (via Bloomberg) from the President of BAC:
David has made the decision to leave the firm after nine years as an economist due to family issues of a personal nature. He has relocated to his hometown of Toronto, Canada and intends to return to the financial services industry with a buy-side firm in Toronto. Rich, after more than 20 years as a sell-side strategist, has made the decision to pursue new challenges, including potential opportunities on the buy-side, teaching and perhaps authoring another book.
It is of course, standard corporate speak.
Bank of America has had huge problems absorbing Merrill — the culture is very different, the businesses don’t mesh well.
I suspect both analysts have been chafing under the new regime; Rosenberg’s star has clearly risen over the past 2 years, and its easy to see him being taken for granted by BofA.
Bernstein (also a star) very publicly trashed the banks yesterday, and while you can do that when you work for Merrill, I would imagine its frowned upon when the name over the door is Bank of America. “Exploring opportunities” is corporate speak for shown the door (I am curious if can confirm if RB was pushed).
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Source:
Bernstein, Rosenberg Plan to Leave Bank of America
Bob Ivry and David Mildenberg
Bloomberg, March 242009
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_ujysijdX.E
March 24th, 2009 at 11:06 am
Rosenberg has been right when most of his firm was wrong. As most of us know, having predicted the crash does not make one popular with those around us who failed to see it coming. Bernstein likes to call it as he sees it as well. Neither of them is likely to prosper under Ken Lewis’ Boobs of America regime.
Successful re-test of SPX 810 currently in progress. We are playing this from the long side, although somewhat less aggressively than after Friday’s reversal to SPX 760. A break of 800 would end the rally, but looking at the currency movements today we think that is highly unlikely. This rally will run out of steam, but not here.
March 24th, 2009 at 11:08 am
BAC also probably didn’t appreciate the fact that these two wouldn’t “get with the (confidence) program”. All that doom and gloom propaganda, I mean, facts and truth, wasn’t endearing them to old Kenny Lewis down in Charlotte.
March 24th, 2009 at 11:14 am
I told you there was something weird about how Rosenberg’s analysis from a few months back was disappeared.
March 24th, 2009 at 11:20 am
Another unintended (or is it?) consequence of propping up failing zombie firms – - the real best and brightest usually end up bailing for greener pastures, while the mediocre (zombies) stay behind to go through the motions (or “go with the flow”) so they can collect a paycheck.
March 24th, 2009 at 11:26 am
Doesn’t Rosenberg know that Canada has socialized medicine? =P
March 24th, 2009 at 11:34 am
Not much genius in Charlotte, apart from great barbecue.
I doubt these two would fit in with the Good Ol’ Boy culture.
March Winds blow the hardest.
Look out for April Showers after we hit those Q1 “performance” yardsticks.
March 24th, 2009 at 11:41 am
Everyone in the know , knows that their contracts were up , and with the Government trying to impose martial law paychecks on them , they decided to go back to the free market world
~~~
BR: I know for a fact that wasn’t relevant . . .
March 24th, 2009 at 11:43 am
Why would anyone with talent stay at a firm with limited upside ?
It’s not as if there still isn’t money out there
Level A talent is running out the door in droves ….
March 24th, 2009 at 11:43 am
@1001: So Canada (where Rosenberg is headed) has more of a “free market” than we do? Their banking system is far more highly regulated than ours is (and ranked #1 in the world by the way).
March 24th, 2009 at 11:45 am
It is now …. check out RBC for example
3rd largest trader of US equities in the world now
1st largest trader of energy stocks in the world
March 24th, 2009 at 11:47 am
@1001: Also a lot more highly regulated than we are, no?
March 24th, 2009 at 11:49 am
I’m not in commercial banking
Capital Markets is a different world
March 24th, 2009 at 11:51 am
@1001: So you’re in Canada? If so, how regulated are its capital markets? More or less (or just better enforcement) than the U.S? Would be surprised if it were less but you’d know better than if you live/work there.
March 24th, 2009 at 11:53 am
RBC’s US trading desk is in NYC
I don’t work for them
Just an example of a firm that doesn’t have pay limits since they didn’t receive TARP
March 24th, 2009 at 12:02 pm
Looks like Stiglitz sides with Krugman and many of the know-nothing idiots here on TBP.
http://www.reuters.com/article/topNews/idUSTRE52N1IO20090324?virtualBrandChannel=10112
March 24th, 2009 at 12:12 pm
This plan will never work , it’s almost as flawed as that fraudelent stimulus bill passed last month
3 large PE firms that I am close with will never invest a penny in it
March 24th, 2009 at 12:13 pm
@Mannwich,
Politics is the art of the possible, and liberal perfectionists like Krugman have been as bad as the Republicans because neither have provided reasonable, achievable solutions to the crisis.
March 24th, 2009 at 12:22 pm
gee… if only the retention bonuses had been just a little bit higher – do you think that these guys would have stayed??
March 24th, 2009 at 12:29 pm
@franklin411: We shall see who’s right. I’d prefer to listen to those now who’ve been right all along.
March 24th, 2009 at 12:39 pm
The guys who should be getting the retention bonuses are being shown the door.
March 24th, 2009 at 12:39 pm
I have two close relatives at Merrill, one is in management. Over lunch with them and their wives the other day all vented at me. BofA is bank tellers without a clue. Almost no one has a Series 7, or any other license and none have market experience. It’s like having an office filled with rookies who now call the shots. Both of them have their hands on suitcases ready to get out with full support from their wives. Problem is that every other country in the world is as bad as the Democrats….I mentioned Monaco or Lichtenstein; they countered with Dubai and Hong Kong.
March 24th, 2009 at 12:40 pm
Mann,
It’s not about who’s right. It’s about finding the best solution that can get through a Congress that’s split 50/50. I count the yellow dog Democrats (they call themselves blue…to me, they have a yellow stripe up their backs a mile wide) as Republicans.
March 24th, 2009 at 12:42 pm
1st we lose ‘Tanta Vive’ to the great beyond…..
then Merdith gives us a big scare (false alarm) departing Op & Co. but thankfully, she is still sharing her sagacity with blogdom….
but now ‘Rosie’ might/might not not be there for us in blogdom …
Only change is constant.
March 24th, 2009 at 12:45 pm
@franklin411: Sure it’s about “who’s right”. If they’re wrong and their plan doesn’t improve conditions in the wider economy and markets, then where does that leave us?
March 24th, 2009 at 12:47 pm
“Politics is the art of the possible, and liberal perfectionists like Krugman have been as bad as the Republicans because neither have provided reasonable, achievable solutions to the crisis.”
Uhhhh no. Krugman and some of us know-nothings here were in favor of bank nationalization a long time ago. It’s the Republicans playing Chicken Little, as they should be. Their Rand Illusion is crumbling down around them and they’re running for their lives.
March 24th, 2009 at 12:48 pm
That’s the way Ken Lewis and Bank of America operate: slash n burn. I worked at Banc of America Securities when Bank of America “merged” with Nationsbank. It was supposed to be a merger of equals. Within 6 months, ALL top brass from B of A were aggressively shown the door. Ken Lewis couldn’t be more disconnected with reality. Once an old school Southern banker, always an old school Southern thug banker.
March 24th, 2009 at 12:57 pm
Is anyone watching Geithner’s Q+A? He looks really good!
And Kyle and Mann, I’m not saying you’re wrong or Krugman’s wrong. I’m saying…It ain’t 1933, and nationalization is not going to happen, period. It doesn’t matter if nationalization is the best solution. Politically it’s a non-starter.
March 24th, 2009 at 1:01 pm
Mannwich, a couple of differences in the Canadian system, are that mortgage brokers are not as prominent
here as they are there. Most people still get their mortgages through their bank, and the credit requirements are strictly enforced. As our banks hold their own mortgages they of course have an incentive to ensure the credit info is accurate. I don’t believe you would ever see a mortgage granted in Canada to individuals in the circumstance that was shown on Dateline NBC the other evening ie: the lady who made $1600/month and was given a 100% mortgage of $260,000.
Secondly, I would say we are more regulated as compared to the US banks, and would be very surprised if any Canadian banks were leveraged at 40 to 1, although I have no proof.
March 24th, 2009 at 1:02 pm
@franklin411: Geithner handling himself just fine. Agreed. However, putting the pieces back together again and trying to preserve the status quo with banking/financial system isn’t going to get it done from a macro perspective. Never said it was 1933 but focusing so much of our efforts on preserving the rotten system that we have is the wrong thing to do IMO. Without systemic and structural change in our financial system (doesn’t necessarily have to be “nationalization” per se) and economy, I honestly don’t think confidence or trust, and hence, “animal spirits”, truly returns. Trying to recapture the fake economy of the prior 5-6 years isn’t going to get it done. That’s all I’m saying.
March 24th, 2009 at 1:03 pm
Thanks for the info, greg. That’s kind of what I suspected.
March 24th, 2009 at 1:11 pm
BoA’s not handling the CFC merger so well, either. Such is the way of M & A. You necessarily must rid yourselves of prior management, unless you just want to be something of a shareholder w/ veto power, and otherwise let the franchise operate as it did before. That seems to have been the model w/ Buffett’s many acquisitions, and it more or less worked for him.
But if you wish to own the enterprise in the traditional sense of making its market yours, you necessarily must fire the prior management, but particularly the best of the prior managers. Elsewise, the corporation would operate without your managerial genius, and the prior management would retain the loyalty of the employees it had hired.
BoA is just about through w/ firing all the managers from the old CFC. It remains to be seen how well the new management is able to maintain the market share it bought.
March 24th, 2009 at 1:18 pm
“And Kyle and Mann, I’m not saying you’re wrong or Krugman’s wrong. I’m saying…It ain’t 1933, and nationalization is not going to happen, period. It doesn’t matter if nationalization is the best solution. Politically it’s a non-starter.”
If it’s not 1933, then why must we have a “new” New Deal?
And nationalization by any other name would smell as sweet…
March 24th, 2009 at 1:31 pm
I saw their prime minister on a business news channel recently (not sure which one) and he indicated that their largest banks run UNDER their legal leverage limit. The interviewer was shocked – not only that the limit wasn’t 30 to 1 – but that they operated below what was possible. Inconceivable!
March 24th, 2009 at 1:42 pm
I’d also be interested to find out how Canadian bank CEO’s/execs are paid there. What kind of incentive system do they have? It seems to me that the executive compensation/incentive system is largely what has driven this fiasco. These execs have used their firms as their own piggy banks, and were largely incented to take reckless risks to enrich themselves at their companies’ expense, and unfortunately at this country’s and the world’s expense. Sickening. And to top it off, most of them are still in their positions and haven’t faced any consequences for this behavior.
March 24th, 2009 at 2:15 pm
Pretty ugly story about Merrill layoffs:
http://www.bloomberg.com/apps/news?pid=20601109&sid=agdquPfpIk78&refer=home
March 24th, 2009 at 2:45 pm
This is terrible. The best and the brightest are abandoning us. These people are our betters and we are tossing them out like loose dog crap wrapped in old newspaper. How can we possible understand the ways of Money without them? Does Obama know? He should be told so that he can apologize for making things so rough on them lately. This is horrible. Actual financial executives actually leaving their company. Why? Why? Why?
March 24th, 2009 at 3:03 pm
…..the smart people are leaving the sinking boat, candace (head of research)……and you’d better do the same…..there’s no future for Merrill’s franchise…..now its too late…..dont fget that a flood of strategic departures has broken key relationships with clients destroying the reputation of merrill’s franchise…..stuart graham, ed najarian, rosie, bernstein….thats what happens when a bread&butter commercial bank falls in love with ibk…..try again, ken…..the next deal will be better
March 24th, 2009 at 3:13 pm
@BR: The thing that’s really galling to me is that it’s mostly the rank and file at these failing firms that are bearing the brunt of this mess. I know that’s sort of been the way of the world since the beginning of time but it’s still galling nevertheless. Most people are now finally realizing that the gains of the past few decades didn’t translate into real wealth for them. Just more debt and maybe a loss one’s job, career, and/or home.
March 24th, 2009 at 3:29 pm
I can’t believe you think these losers have talent. They exposed themselves, their companies, and their whole country, never mind the rest of the world, to massive risk based on assumptions. Any third grade kid knows what goes up must might very well come down again, and their brilliant genius plan involved a housing market that constantly increased in value.
If these so called geniuses were so smart, why are we in this mess? If you call it level A don’t forget the SS
Just fire them, period.
March 24th, 2009 at 3:36 pm
@bman: Rosenberg was one of few insiders who got this right. Don’t know about Bernstein though.
March 24th, 2009 at 7:03 pm
I can’t imagine working for anyone from Carolina.. North or South. Impossible. Rather mow lawns
March 24th, 2009 at 8:12 pm
howard0339 ,
BoA is *bank tellers without a clue*????
You think Merrill is so savvy?
Bro, Merrill bankrupted themselves despite those vaunted Series 7’s.
For sure Merrill has more brains, but that’s offset with less scruples. And Merrill employees complaining about BoA just shows their bottomless sense of entitlement. Rightfully they should all be out on the street with a bankrupt company headlining their resumes.
March 24th, 2009 at 9:29 pm
In the late 80s the wind shifted and smart people figured out they had to accumulate as much as they possibly could and stay as high above the power curve as they could. And that was the great divide.
So yeah. CEOs don’t typically sack their buds on executive row for fear of being sacked.
But everyone else is fair game.
March 25th, 2009 at 2:45 am
3 large PE firms that I am close with will never invest a penny in it
Then they aren’t very good because the terms heavily favor buyers.
March 25th, 2009 at 4:49 am
After one year, only 13 of the highest 50 execs from Bear Sterns remains with Morgan. Don’t see why this one should be any different, especially with Congress threatening higher taxes on bonus pay. I noticed neither left to join a TARP recipient….
March 25th, 2009 at 6:43 am
the reason why BoA has 0% chance to avoid nationalisation is complexity…..you cant leave a multiple trn balance sheet in the hands of a carolina-based management team….have a clue how much ken spent in the last 3 years in MBNA/Countrywide/LaSalle & Merrill? do you really think earnings will now start feeding through the bottom line? have a clue what rising credit costs will mean for BoA P&L? …..well, maybe you still believe in ken’s synergies s**t ? BoA faces a massive complexity issue (ken calls it scale), a structural lack of talent in most divisions (who’s running the IBK now? you ken? will your 50$bn broker be there in 6 months?) and disgraced exposure towards the US consumer…..think this is really the winning strategy? ….thanks a lot to john thain: GS will thrive without competitors in the next years (thinking of a TARP exit while everybody’s dying….ha ha….maybe utilising AIG’s money to reimburse the Treasury?….ha ha….)
gooood luck charlotte…..the day of the unraveling is just around the corner……