NEW YORK — The beleaguered head of Merrill Lynch & Co. has reportedly decided to step down and leave the firm, becoming the first chief of a Wall Street investment bank to be done in by the sub-prime mortgage crisis.
Stan O'Neal, who endured withering criticism last week because of Merrill's enormous losses on mortgage-related securities, will quit his post as soon as today, according to a report on the Wall Street Journal's website.
Several candidates are in the running to replace O'Neal, with Laurence Fink, chief executive of money manager BlackRock Inc., which is partially owned by Merrill, considered the leading candidate. Also thought to be under consideration are Robert McCann, the head of Merrill's powerful brokerage division; and John Thain, the chief of NYSE Euronext Inc., the parent company of the New York Stock Exchange.
A Merrill spokeswoman declined to comment on Sunday.
O'Neal's apparent demise is rapid even by the standards of Wall Street, which has never been known for job security. O'Neal earned generally high marks throughout much of his five-year tenure. But few executives have suffered the kind of back-to-back blows O'Neal did last week.
On Wednesday, Merrill wrote down $7.9 billion in losses caused by beaten-down sub-prime and other mortgage-related securities, the largest such hit taken by any Wall Street firm.
Less than three weeks earlier, Merrill had forecast $4.5 billion in mortgage write-downs, which itself had followed earlier assurances from the company that its mortgage-related hits would be moderate. The $3.4-billion increase in such a short span caught analysts and investors flat-footed and raised doubts about Merrill's credibility in estimating and disclosing its losses.
Including losses on bonds related to troubled private-equity deals, Merrill's total write-down was $8.4 billion and its third-quarter net loss was $2.2 billion.
O'Neal also was hurt Friday by a reported overture to Wachovia Corp., a North Carolina-based banking giant, about a potential merger. O'Neal, who is also Merrill's chairman, reportedly angered his fellow directors by approaching Wachovia without their knowledge.
Analysts wondered why O'Neal would court Wachovia, an up-and-coming bank but much less established than other potential partners such as JPMorgan Chase & Co. or Bank of America Corp.
Some speculated that it was a sign of desperation in Merrill's executive suite.
