Chapter 752: Contradictions intensify

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"So what are you waiting for, let's do it quickly. The longer it drags on, the worse it will be for us!" Stan O'Neill enthused.

More than anyone else, he wants to take back control of Merrill Lynch.

"There's one more problem. If we start lobbying with all our might, then our alliance will be exposed, and we will lose our current advantage against Bruce Guo in the open. Charles Prince, President and Chief Operating Officer, Bear Stearns.

"Charles, nothing is the best of both worlds. And Bruce Go's abilities may not be unaware of our presence. Halliburton Energy CEO Steven Leppin said.

"I'm afraid the other party has already noticed it. ”

After John Watson, president and chief operating officer of Chevron Texaco, finished speaking, he looked at the eyes of everyone focused on him, "My bodyguards have discovered that in the past two weeks, there have been people following and monitoring my residence and the company. Although there is currently no evidence of which side these surveillance guys are from. But from the time we start to compare the time of their appearance with the node of Bruce Guo, it is not difficult to guess who is behind. ”

"I'm afraid he was also aware of our existence and decided to do something to Merrill Lynch!" said Jeremy Dell, CEO of Barclays Capital.

"In that case, there's nothing to hesitate about. ”

Steven Leping Road.

Everyone nodded in agreement.

"Let's start after the meeting is adjourned, mobilize the forces of all parties, and lobby the Senate and the House of Representatives!"

There is no doubt that the struggle from darkness to light will become more intense. However, at this time, Guo Shouyun was still immersed in the joy of acquiring Merrill Lynch, and he was not very aware of what was about to happen. Of course, the monitoring personnel of the Ministry of Information still reported that 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 next integration with Phoenix Bank.

"How is it, how is it different from the information we collected from Merrill Lynch?" asked Guo Shouyun.

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

"There are a few differences, but not very big. ”

Guo Shouyun nodded and waved his hand to continue.

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

The full name of Merrill Lynch is 'Merrill Lynch Pierce Fenner Smith Company', referred to as Merrill Lynch Company. It is also known as 'Merrill Lynch Bank' by the outside world. The reason is that Merrill Lynch is involved in the lending business engaged in by commercial banks.

Anyone familiar with the U.S. financial industry knows about the Glasssteagall Act, which divides the scope of business between commercial and investment banks. But under the leadership of Merrill Lynch's seventh CEO, Donald Derigan, Merrill Lynch has been encroaching on the business of commercial banks.

In order not to touch the Glasssteagall Act, they thought of a way to only lend money in the United States and not take deposits from the public, which was not considered a violation of the Act. However, it has added new business and expanded new revenue points.

In the international market, which is not blocked by the Glasssteagall Act, they are like the British banks, although they have the name of investment banks, they do everything that the financial industry can do, including deposits and loans.

In 1999, when the United States repealed the Glasssteagall Act, there were no blind spots in Merrill Lynch's business.

"At the end of 2004, Merrill Lynch had total assets of $175 million, of which $130 million were managed in the private client business, and the global asset management business held a total of $557 billion, shareholders' equity of $22.78 billion, net income of $37.7 billion and net profit of $5.43 billion. ”

Currently, Merrill Lynch has 975 offices in 44 countries and 48,000 employees. The company has a total of 49 business units divided into six business segments: Private Clients, Asset Management, Insurance, Investment Banking, Debt Markets and Equity Markets, which are overseen by six Executive Vice Presidents. ”

"Merrill Lynch now has $450 billion in equity assets and 19 times leverage. The largest proportion was investment in different assets and derivatives, accounting for 28.9%, reaching US$130.9 billion, followed by private equity investment, accounting for 13.7%, reaching US$61.65 billion. There are seven private equity heavyweights, namely Bloomberg with 20.7%, Verizon Telecom with 7.4%, Cisco with 5.3%, Huaxia Telecom with 4.5%, Mexico Telecom with 4.2%, Modu Petrochemical with 4%, and Berkshire Hathaway with 3.4%. ”

"Futures investment, which accounted for the third largest proportion, accounted for 9.37%, reaching $42.2 billion. Gold spot and oil futures are the most, accounting for 73%, and there are long positions with triple leverage. According to Merrill Lynch's filings, the gold spot and oil are pegged to the Thunder Fund. It was clear that Merrill was following the boss. ”

Guo Shouyun smiled, he was not surprised at all about Merrill Lynch's choice. In fact, the Thunder Fund's investment strategy, especially in gold and oil, has proven itself with five years of ultra-high returns. Whether it is Merrill Lynch or Goldman Sachs, including MG Chase, Citigroup and other financial giants, when investing in gold spot and oil, they will keep an eye on the Thunder Fund.

"In the end, Merrill Lynch's exposure is much larger than we previously understood. Real estate and derivative securities, in particular, reached $18.9 billion, beating our previous estimate of $12 billion. ”

Risk exposure, is a financial term. Simply put, it's an unprotected risk. To take a simple example: you buy a group of ABS bonds secured by real estate, and since the bonds are credit risky and you are not doing any hedging trades, you have a credit risk exposure.

If the real estate market price falls, then you will suffer a loss. This is also the main reason for the subprime mortgage crisis.

However, if you purchase a 'credit default swap' for this group of ABS bonds, the loss of falling real estate prices will be compensated by the insurance company or financial institution that owns the 'credit default swap'.

Credit default swaps, also known as CDS. At the time of the subprime mortgage crisis, the size of the CDO in the United States was only about 2 trillion, but the CDS was as high as tens of trillion. It is the real culprit that induced the subprime mortgage crisis!

In addition, as for the specific concepts of CDO and CDS, I have mentioned it earlier, so I will not mention it here. In addition, I will explain it in detail later when I talk about the subprime mortgage crisis.

Hesitating Guo Shouyun to intervene relatively early, Merrill Lynch's risk exposure in the real estate and derivative bond sectors continued to increase.