Merrill Lynch: Getting Warmer

The surprise news that Merrill Lynch is writing down an additional $2.5 billion likely means that CEO Stan O'Neal slipped a rung in the "5 Levels of CEO Media Hell." O'Neal's story archetype has shifted from the "Is he winning" to the "Against the wind," which means reporters are now explicitly questioning his job security.

The WSJ's Kevin Kingsbury sprinkled the following observations in today's story.

"The result will be pressure on Mr. O'Neal, who ousted two top bond executives three weeks ago when the extent of the losses became apparent, to make further changes."

"Mr. O'Neal's own job could be in jeopardy depending on the actions he takes to reassure Merrill's board, which met over the past weekend, that his understanding and management of the firm's risk levels has improved. At the end of July, with a midsummer credit crunch under way, he sent a memo to reassure Merrill employees that the firm's risk level was under control."

The NYT's Jenny Anderson makes a similar call.

"The additional write-down, coming so soon after the company's $5 billion charge, may raise more questions about the leadership of E. Stanley O'Neal, Merrill's chief executive, and the ability of his top executives to assess the firm's risk exposure."

Bloomberg's Bradley Keoun enlists a buy-sider to do the dirty work.

"Investors who lauded the 56-year-old CEO for chasing higher returns now question whether he policed the risks as he pushed the firm to become the biggest underwriter of debt securities backed by subprime loans.

"'We're very disappointed,'''said Rose Grant, who helps manage about $2 billion at Eastern Investment Advisors in Boston, including Merrill shares. `'I don't think Stan O'Neal will step down, but you do have to look at top management and wonder why they didn't know the extent of this loss.'"'