On June 11, Greg Fleming, the president of Merrill Lynch, took a call from Larry Fink, the CEO of BlackRock, a company that was rumored to be a candidate to buy Lehman Brothers. Fink was furious that the CEO of Merrill Lynch, John Thain, had said he was selling BlackRock. It turned out that Thain had only answered a hypothetical question about when he might consider selling BlackRock and Bloomberg. In light of the state of the industry, however, this left Merrill Lynch viewed as “the most vulnerable brokerage after Lehman” (138). Ultimately, Thain met with Michael Bloomberg and arranged for Bloomberg to buy back Merrill’s 20% in the company, giving it “the lifeline he had been hoping for” (150).

Like other banks, Merrill Lynch had a balance sheet “loaded with subprime loans the company had been unable to get rid of, and it likely needed to raise more money” (136). Its problems were “becoming evident to others on Wall Street, feeding a perception that Thain did not have a solid grasp on the firm” (142).

The previous CEO, Stan O’Neal, had redirected it “into riskier but more lucrative strategies” (146), similar to Goldman. He “ramped up the firm’s use of leverage, particularly in mortgage securitization” (146).