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O'Neal's Ouster: The Big Picture

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O'Neal's Ouster: The Big Picture


O'Neal's Ouster: The Big Picture

O'Neal's Ouster: The Big Picture

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Merrill Lynch has given CEO Stanley O'Neal the boot. Is it bad news for African Americans climbing the corporate ladder? Farai Chideya talks with Alfred Edmond, Jr., senior vice president and editor-in-chief of Black Enterprise.


From NPR News, this is NEWS & NOTES. I'm Farai Chideya.

The head of one of America's biggest financial management company stepped down last weekend. E. Stanley O'Neal served as the CEO for Merrill Lynch for six years before retiring. O'Neal was one of only a few black CEOs ever to be appointed by a Fortune 500 company. And under O'Neal, Merrill Lynch made some investment moves that were pretty risky even for a banking giant. So was O'Neal just being responsible leading by stepping down or did his race make him an easy target of Merrill's board of directors?

Here to talk with me now about the career and legacy of E. Stanley O'Neal, we've got Alfred Edmond Jr. He's senior vice president and editor-in-chief of Black Enterprise.


Mr. ALFRED EDMOND JR. (Editor-in-chief; Senior Vice President, Black Enterprise): Hey, how are you doing?

CHIDEYA: I'm doing great.

So I mentioned that O'Neal led the company into making some risky investment boost. Can you explain to me, simply, some of the decisions he made that might have led to this?

Mr. EDMOND: Well, it's important to understand that O'Neal didn't make this decision in a vacuum. As you know, the whole nation is caught up in this kind of mortgage crisis in which a lot of the national institutions, including Merrill Lynch, invested in mortgage bank securities. And now you see a lot of foreclosures and mortgage problems coming on and that's having impact on all the financial services companies. In fact, O'Neal is not the only executive who's had to step down in light of all of this and there's probably going to be some more people.

What basically happened is - I'd say that what O'Neal did wasn't really more risky than what anybody else is doing but, obviously, when you come up with a billion dollar loss that has to be explained.

The simple thing is this: there are region of rejection of the loss for this particular quarter was less than half of what it turned out to be and that, I think, was the biggest, biggest deal. I don't think of it so much that he was doing more riskier deals than anyone else, but I think he sent a negative signal to the shareholders and other people observing the company, that if you say it's going to be one thing and it turned out to be twice as much, you know, maybe it's worse than we think it is.

CHIDEYA: What does it mean to have had O'Neal at the head of this investment bank? What will it mean over time, if anything, that he will no longer be the head of Merrill Lynch?

Mr. EDMOND: Well, it won't mean anything that he will no longer be at the head. You know, as I've said before, these aren't jobs that last a lifetime. I mean, he did a great job up until 2006 when everybody was benefitting from the boom and the growth in mortgages and investing in mortgage bank securities. The tide, obviously, has turned in the past year, but I think the first four to five years of success as the head of Merrill Lynch is going to mean a lot more than this past year that resulted in him having to resign. The reason of this is…

CHIDEYA: So a lot more to whom?

Mr. EDMOND: Say that again?

CHIDEYA: A lot more to whom?

Mr. EDMOND: To African-Americans who are setting sights on what they can accomplish both on Wall Street and in corporate American as a whole. I mean, the reality is you got a former, you know, cotton-picker from Alabama rise to run for five years, you know, one of the largest, most storied, you know, Wall Street companies. And I think what that does is send a message to other aspiring African-Americans and other minorities that at least it's possible.

And also we're learning some lessons about what it means to be a CEO. It's a high-risked, high-reward job when you're doing well. And we all know about CEO compensation, these bonuses that they're getting, and the benefits and perks, but it's also a high-risked job in that if you have a bad year or even a bad quarter, the axe could fall on you faster than it might fall on just a rank-and-file employee in the company.

CHIDEYA: How much do African-American CEOs influenced the landscape of money and race? What I mean by that is, there are many occupations where a black people are overrepresented and other ones where black people are underrepresented including finance, if you have a black CEO, whether it's a Parson's, whether it's an O'Neal, does that mean that there's going to be ripple effect of really looking at hiring strong black candidates throughout the company or is that not necessarily the case?

Mr. EDMOND: Well, I think of various company - the company and the reality is since there're still relatively few. It's hard to really draw conclusions about what the broader impact is. I mean, you're still talking about less than - even before Stanley O'Neal's resignation - less than 10 instead of Fortune 1000 is 1 percent. So it's probably too early to tell in the history of America and corporate America when you can draw some broader conclusions about what it means to have a black CEO.

I will say that if you look at it from company to company, there are some impacts that a black CEO can have both intentionally and just symbolically a, you know, if yours is a company that has a black CEO running the company, it automatically sends a message to you as a person of color who may be striving in that company. Your perception is going to be that at least it's possible for me to advance in the company. It may not happen but it's at least possible.

I remember once, I was interviewing the former chairman of Xerox, Dave Kearns, who is not black - he's white - but he was saying that, you know, most of the white men who get hired by corporation, they're not going to end up becoming CEO, but the difference is that in their minds they have a belief that they can get there if they want to. And what we have to change is the perception among minorities that they can get there too.

And I think when you look at O'Neal, when you look at Ken Chenault of American Express, when you look at Dick Parsons at Time Warner, when you look at somebody like Renetta McCann at Starcom, at least now you have enough faces in the place that young person coming in to corporate American, because they will, at least, there's a possibility I can get there. And that's the biggest impact, I think.

CHIDEYA: Well, thank you so much.

Mr. EDMOND: My pleasure.

CHIDEYA: Alfred Edmond Jr. is senior vice president and editor-in-chief of Black Enterprise.

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