Merrill’s CDO pain

Merrill Lynch saved the worst for last. The investment bank unveiled some $5bn of writedowns, mainly on highly-rated collateralised debt obligations, making it the only major Wall Street firm set to report a loss from the turbulent third quarter. Though investors may cheer Merrill’s revamp of the firm’s fixed-income management team, chief Stan O’Neal will need to work hard to win back their confidence in his strategy. Under O’Neal, Merrill not only cemented its role as the top underwriter of CDO...