Merill Lynch Denouement: Okay, It Was Politics

There's still no formal announcement from Merrill Lynch, but the financial news pack that helped topple Stan O'Neal has already moved beyond the climactic decapitation. Oddly enough, the collective epilogue is suddenly recognizing that, yeah, internal politics did indeed play a role.

The same NYT tandem that served up the oppo's strategic leak on Wachovia summarized:

"Mr. O'Neal's fall has been stunning in its speed and ferocity. This spring, Merrill's stock was trading around $95 a share, and Mr. O'Neal was being celebrated for transforming Merrill into a more aggressive, risk-friendly institution. Last week, the stock sunk to as low as $59 a share.

"The events underscore that on Wall Street, even the highest paid chief executives with handpicked boards are not immune to the furies of investors and employees.

"His fall is also a reminder of how dangerous it is to tinker with a firm's culture. Having declared the idea of a nurturing Mother Merrill passe, Mr. O'Neal has discovered how vengeful a spurned culture can be."

The Times story did not comment on whether O'Neal had revelations about how dangerous it is to have enemies who know how to play scoop-starved reporters.

The WSJ, which clearly flooded the zone over the weekend to make up the perceived Wachovia gap, assessed it this way.

"In some ways, Mr. O'Neal's downfall seems a straightforward consequence of last week's announcement that Merrill would write down $8.4 billion in the third quarter -- $7.9 billion of that connected to its revaluation of mortgage-related assets -- the largest loss in Wall Street memory. But many Wall Street executives were stunned by the speed with which the board, most of it picked by Mr. O'Neal, was willing to throw its chief overboard.

"Mr. O'Neal, after all, is widely credited with boosting Merrill's profitability and transforming it from a U.S.-focused retail broker to an international financial giant with strong footholds in important segments such as commodities, private equity, asset management and bonds.

"Some former colleagues say Mr. O'Neal's talent and steely drive came with a tragic flaw: He didn't much engage in debate, kept his own counsel and had little use for the kind of strong-willed subordinates who might have helped him steer clear of the subprime troubles that brought him down. In the early years of his tenure, which began in 2002, Mr. O'Neal purged the firm of many of its longtime senior employees and later fired some of those considered his allies."

Bloomberg's Bradley Keoun provided a summary any Greek chorus would be proud to moan:

"O'Neal was ensnared by the very culture he fostered at Merrill. Under his leadership, executives who outgrew their usefulness were more readily cast out or bumped down."

But the most honest commentary came on CNBC's Squawk Box, with Charles Gasparino making the point with appropriate bluntness.

"Stan O'Neal's demise probably began the minute he got in there, when he looked to change the culture, and he laid off a lot of people, and he wanted to get rid of the concept known as 'Mother Merrill.' And you know when you do that, you better be good all the time.

"And you have to grow the business. And that's the real problem with Stan O'Neal. He never grew this business.

"If you're going to be autocratic, if you're going to do stuff like that, then you'd better be perfect. And let's face it, he was not perfect."

Not blunt enough for you? Try this Gasparino add-on moments later.

"But Stan was not a... you know, he's not a friendly guy. You know what's kind of interesting about this, he never warmed up to the troops. He was hated. He was hated. It was no doubt - he was hated."

But the best points came from the Squawk Box guests. Here's a snippet between Gasparino, Joe Kernen and Punk Seigel's Richard Bove.

Kernen: "You had some weird comments here, Dick. I want to talk about it. You're saying there were people inside Merrill that were doing a hatchet job on Stan O'Neal, and that wanted him out. It looks like there was a lot going on there, right?"

Bove: Oh, yeah, absolutely. I think that the story that appeared in the New York Times was clearly fed to them by someone inside of Merrill, because it was a pretty silly story in the first place, because there's no likelihood whatsoever a company the size of Wachovia could take over a company the size of Merrill Lynch. And if anyone had talked to Wachovia, my guess is that they would have found very quickly that there was no likelihood of this happening. But somebody wanted to get Stan O'Neal, so they sent that story to the New York Times. And the New York Times was happy to print it."

Gasparino: "Dick, it's Charlie Gasparino. Who do you think planted that story? I mean a lot of people on the Merrill board speculate that it's Bob McCann. He has the most to gain from it, because he's head of the brokers division. It's not that the board was really mad, but the brokers are going crazy, because if you merge Wachovia with Merrill, you basically gotta kill a lot of brokers. Isn't that true?"

Bove: "Yeah, absolutely. And I think, however, this was building up to become a Morgan Stanley-type situation, where you had a group of people who were putting together, if you will, a team that were going to make calls to the press every day, as the Morgan Stanley Group of 8 did, in order to oust Stan O'Neal."

But the lone quip from CNBC's Carl Quintanilla identified the main dynamic causing the sudden narrative shift that came once O'Neal's head was safely plated.

"The papers today don't have a problem getting people on the record saying what was wrong with his management style."