Vol 2 Chapter 752 Conflicts

Chapter 752: Intensification of Contradiction

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“Then what are you waiting for, hurry up. The longer it takes, the worse it will be for us!” Stan O’Neal said excitedly.

He wants more than anyone else to take back control of Merrill.

“There is one more problem. If we start lobbying at full strength, then our alliance will be exposed, and we will lose our current advantage against Bruce Guo in the open.” Bear Stearns President and Chief Operating Officer Charles Prince.

“Charles, nothing is the best of both worlds. And Bruce Guo’s ability may not have been unaware of our existence.” Halliburton Energy CEO Steven Lippin said.

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“I’m afraid the other party has already noticed it.”

After finishing speaking, John Watson, President and Chief Operating Officer of Chevron Texaco, looked at the eyes that were all focused on him, “My bodyguard discovered that in the past two weeks, there was a gap between my residence and the company. There are people who are tracking and monitoring. Although there is no evidence that these monitoring guys are from which side. But from the time we started targeting Bruce Guo and comparing the time of their appearance, it is not difficult to guess who is behind.”

“I’m afraid he also sensed our existence and decided to take action against Merrill!” said Jerry Midell, CEO of Barclays Capital.

“If that’s the case, then there’s nothing to hesitate.”

Steven Lippin Road.

Everyone nodded in agreement.

“Let’s start after the meeting, mobilize the forces of all parties, and lobby the Senate and House of Representatives!”

The battle from dark to light will undoubtedly become more intense. However, at this time, Guo Shouyun was still immersed in the joy of acquiring Merrill Lynch, and did not notice much about what was about to happen. Of course, the monitoring staff of the Ministry of Information still gave feedback. The news that his enemies were gathering in New York made Guo Shouyun wary of these guys.

Of course, now he is more concerned about the management of Merrill Lynch and the subsequent integration with Phoenix Bank.

“How is it? How different is it from the information we collected about Merrill Lynch?” Guo Shouyun asked.

For more than three years, he has been thinking about acquiring Merrill Lynch, and naturally he will not relax his investigation and research on it. Not only Phoenix Bank, but Will Harrington’s Information Department also collected a lot of information about Merrill Lynch’s operations. Of course, information is just information. If complex financial transactions are not personally involved, no one can thoroughly understand the real situation of the enterprise.

“There are some differences, but not much.”

Guo Shouyun nodded and waved for him to continue.

“Among all categories in the financial sector, Merrill Lynch is involved in almost every category of business except taking deposits from the public. Including investment banking, private wealth management, insurance, venture capital, leveraged buyouts, etc.”

Merrill Lynch’s full name is Merrill Lynch-Pearce-Fenner-Smith Company, or Merrill Lynch for short. It has also long been called ‘Merrill Lynch’ by the outside world. The reason is that Merrill Lynch is involved in the loan business that commercial banks are engaged in.

Anyone who knows the US financial industry knows the Glass-Steagall Act, which divides the business scope of commercial banks and investment banks. But under the leadership of Merrill Lynch’s seventh CEO, Donald Regan, Merrill Lynch has continued to erode the business of commercial banks.

In order not to touch the Glass-Steagall Act, they figured out a way to only lend money in the United States and not take deposits from the public, which is not a violation of the Act. However, new businesses have been added and new revenue points have been developed.

And in the international market where there is no Glass-Steagall Act, they, like British banks, have done everything that the financial industry can do, including deposits and loans, despite the name of an investment bank.

After the US repealed the Glass-Steagall Act in 1999, Merrill’s business no longer had blind spots.

“As of the end of 2004, Merrill Lynch had total assets of $175 million, of which the private client business had total assets under management of $130 million, the global asset management business held a total of $557 billion, shareholders’ equity of $22.78 billion, and net income of $37.7 billion. , with a net profit of $5.43 billion.”

“At present, Merrill Lynch has 975 branches and 48,000 employees in 44 countries around the world. The company has a total of 49 business units, which are divided into six business segments: private clients, asset management, insurance, investment banking, debt markets and equity markets. , by six executive vice presidents.”

“Now Merrill Lynch has equity assets of US$450 billion, with a leverage ratio of 19 times. The largest proportion is investment in different industries and derivatives, accounting for 28.9%, reaching US$130.9 billion; the second is private equity investment, accounting for 13.7% , reaching US$61.65 billion. There are seven heavyweight stocks in private equity, namely Bloomberg with 20.7%, Verizon with 7.4%, Cisco with 5.3%, Huaxia Telecom with 4.5%, Mexico Telecom with 4.2%, and Modu Petrochemical 4. %, Berkshire Hathaway 3.4%.”

“The third largest futures investment, accounting for 9.37%, reached $42.2 billion. Gold spot and oil futures accounted for the most, accounting for 73%, and triple leveraged long positions. According to Merrill Lynch’s documents, gold spot and oil futures It’s the Thunder Fund. It’s clear that Merrill is behind the boss.”

Guo Shouyun smiled. He was not surprised by Merrill Lynch’s choice at all~www.readmtl.com~ In fact, the investment strategy of Thunder Fund, especially the investment strategy in gold and oil, has used super high returns for five years. proved his strength. No matter whether it is Merrill Lynch or Goldman Sachs, financial giants such as MG Chase and Citigroup will focus on Thunder Fund when investing in spot gold and oil.

“In the end, Merrill’s exposure was much larger than we had previously known. Real estate and derivative securities in particular, at $18.9 billion, exceeded our previous estimate of $12 billion.”

Risk exposure is a financial term. Simply put, it’s unprotected risk. To give a simple example: You buy a group of ABS bonds backed by real estate. Since the bonds have credit risk, and you have not done any hedging transactions, you have an exposure to credit risk.

If the real estate market prices fall, then you will suffer losses. This is also the main reason for the subprime mortgage crisis.

But if you buy a ‘credit default swap’ for this group of ABS bonds, the part of the loss from the fall in real estate prices will be compensated by the insurance company or financial institution that owns the ‘credit default swap’.

Credit Default Swap, or CDS. When the subprime mortgage crisis occurred, the size of the US CDO was only about 2 trillion, but the CDS was as high as tens of trillions. It is the real culprit behind the subprime mortgage crisis!

In addition, the specific concepts of CDO and CDS have been mentioned before, so I won’t mention them here. In addition, I will explain in detail when I write about the subprime mortgage crisis later.

Hesitating that Guo Shouyun intervened earlier, Merrill Lynch’s risk exposure in the real estate and derivative bond fields continued to increase.