Bernstein Research analyst Brad Hintz has Street cred as an ex-Morgan Stanley treasurer and ex-Lehman CFO. But an examination of his record in covering Merrill Lynch and subprime’s impact on investment banks over the past several months shows he was anything but hard-hitting. Hintz’s recent dewey-eyed tribute to Stan O’Neal looks even worse in retrospect.  (Hintz and his research reports are quoted everywhere, including in many Reuters news reports)

Hintz did not return messages for this story. 

Let’s roll the tape and see what went wrong:
In February, the month for lovers, Hintz’s romance with Merrill shares flourished. His note, Thinking about Sub-Prime Risk, said Merrill faces only minor profit declines because of subprime. “So are the brokerage firms increasing their exposure?” he asked.
“We don’t think so. Brokers are simply not altruistic enough to heroically build massive portfolios of poor quality loans just to keep the subprime mortgage market active.”
April 3 - Hintz says worry about Merrill’s subprime exposure is overstated.
May 31 - Insights from the lead Steer - Hintz meets with O’Neal. Price target: $120.
July 18 - Merrill shares are battered. Hintz says buy more.
And like a lot of analysts and reporters, Hintz parroted Merrill’s refrain that the company’s 2006 aggregate exposure to the subprime industry would have been less than 2 percent of Merrill’s total net revenue. 
That doesn’t sound like much. Great quarter, guys.
Oct. 1 - Hintz predicts soft third-quarter results. Goldman’s Tanona: Watch out! whopper $4.5 billion write-down coming.
“We still like this stock,” Hintz said. Merrill should be less affected by the fixed-income market missteps, he says
Oct. 5 - O’Neal unveils $5.5 billion write-down    
Oct. 23 - Hintz not ready to break off the relationship. 
“Let’s recognize that Merrill Lynch is not a fixed-income house,” Hintz said. He sees quick profit recovery in 2008 if management tightens risk controls.
Oct. 24 - Merrill Q3 write-down=$8.4 billion.
Oct. 30 - O’Neal quits under pressure. Hintz salutes O’Neal as stand-up guy.
“Perhaps we have become used to seeing politicians who refuse to accept the outcomes of their policy actions, corporate executives who fire subordinates and proudly announce that the problem is fixed and those Wall Street managers who pathetically cling to power after the market has lost confidence in their leadership. Mr. O’Neal displayed none of these characteristics. During Bernstein’s first meeting with Mr. O’Neal, years before he had been named CEO of Merrill, he confessed his love of the firm. And when he stood up and said ‘I’m responsible’ last week, he knew that, in the sharp elbowed world of Wall Street, he was sealing his fate and ending his career at his much-loved Merrill. If only all Wall Street executives recognized that with authority comes responsibility.”  

What O’Neal actually did on the Oct. 24 conference call was share blame:
“We’re not — I’m not going to talk around the fact that there were some mistakes that were made. We — I am accountable for these mistakes as I am accountable for the performance of the firm overall, and my job, our job, the leadership team’s job is to address where we went wrong. …”    

Bear Stearns Chairman Jimmy Cayne isn’t the only Wall Street honcho who plays a lot of golf while his company endures hard times.

Let us tee up Mr. Stanley O’Neal, chairman and chief executive of Merrill Lynch & Co. Inc.

While the value of Merrill Lynch’s leveraged loans and mortgage investments are expected to fall like a birdie putt, O’Neal has found his stroke in recent months playing just as much, or more, golf than Cayne. (A Goldman Sachs analyst predicts Merrill will report some $4 billion in write downs when the brokerage and investment bank reports third quarter results next month.)

And Cayne caught all kinds of flack for golfing and playing cards while two lousy hedge funds tanked in July. A world-class bridge player, Cayne is a middlin’ golfer with a handicap of about 14.
   
But never mind that. O’Neal golfed like a champ this past summer. O’Neal’s golf handicap is an 8, but in early August he shot two rounds in the mid-70s.
   
O’Neal is a serious golfer.  He played 13 rounds of golf in August, according to Ghin.com, a Web site that tracks scores entered by golfers.
   
This month, O’Neal has not throttled back his golfing regimen as investors brace for bad news. Through Sept. 22, he had logged 7 rounds of golf, according to Ghin.com. On Saturday, Sept. 22, he played three rounds of golf in New York: Purchase Country Club in Westchester County, Waccabuc Country Club and Shinnecock Hills Golf Club in Southampton.
   
He shot an 80, an 89 and a 90 during that golf spree, according to Ghin.com scores. 
   
But the boss is not Merrill’s most active golfer among senior management. That title would go to Robert McCann, Merrill’s global private client chief who oversees about 15,000 to 16,000 brokers and some $1.6 trillion in assets.
   
This month, McCann played 11 rounds of golf through Sept. 23, according to Ghin.com. 
   
Should all this golfing by Merrill bigshots make investors nervous? Does keeping your eye on the ball mean you’re not keeping your eye on the ball?
   
One (golfing) school of thought: Investors should embrace the old work-life balance thing. You gotta think executives will burn out if they just work, work, work. Besides, isn’t the golf course where executives cinch deals, forge customer relationships and build camaraderie. And it sure beats the ropes course or an eight-hour Six Sigma seminar.
   
Another view would be that golf and the exclusive country clubs where executives play are exclusionary in nature. And some might argue that a non-golfer might not have as much chance for advancement as a golfer.
    
There’s probably some truth in both points of view. 
   
But not to worry about Merrill.
   
The company’s co-Presidents, Greg Fleming and Ahmass Fakahany, are not known as golf enthusiasts. Both men, and even McCann, are seen as possible successors to O’Neal. 
   
Some Merrill insiders give a slight edge to Fleming. He is known to send wee hours e-mail messages to his team, and he takes notice of what time in the wee hours individuals respond.  

(Photo. Top, Reuters file. Bottom, Merrill Lynch)     
    

No doubt Warren Buffett can see value in a distressed company like Countrywide Financial Corp. But then again, it’s hard to see Countrywide Chairman and CEO Angelo Mozilo working for the “Oracle.”

First, what would the tabloids call this duo, BuffAngelo or Warzilo, perhaps? And are cavemen any good at hawking mortgage products? And how would Mozilo handle his new compensation package, as administered by Mr. Buffett?

Mozilo, the butcher’s son who has made several hundred million dollars from exercising stock options, wouldn’t get any such generosity from Mr. Buffett. He’s not into such executive incentives, at least not at the level overseen by Mozilo’s, uh, Countrywide’s board. Mozilo might get the employee discount at a certain Omaha, Nebraska jewelry store, though.

And even though Mozilo looks fit as a fiddle, he’s closing in on 70. Would Buffett want the headache of finding a successor while paying the price (Severance=more moolah for Mozilo) of sending Mozilo into retirement?

But maybe there’s another card to play here.

Buffett, sitting on a billions-dollar-high mound ‘O cash in Omaha, could be the liquidity Countrywide needs to ride out the mortgage maelstrom.  BuffAngelo could work something out,  giving Countrywide time to unwind its subprime exposure while getting back on track making loans to borrowers who put money down.

Countrywide, however, isn’t the only mortgage move for Buffett, though. What’s more Buffett-like than a bet on a company that writes mortgage insurance? There’s plenty of distress in that market. MGIC Investment Corp. and Radian Group Inc. come to mind.

Credit Suisse, a leading issuer of junk bonds and the parent of private equity affiliate DLJ Merchant Banking, now is ready for mop up duty, too. The Swiss bank is taking a 33 percent stake in Great American Group, a liquidation company. Great American clients have included K-Mart, Collins & Aikman and Arthur Andersen.

Is Credit Suisse trying to tell us something? Sure, buyout firms and investment banks have beefed up their restructuring groups in the last year, in preparation for a downturn in the frothy debt and credit markets.  These divisions, which focus on distressed assets and work-outs of troubled companies, appear to be nearing a jump in demand, as the credit markets continue to decline, defaults increase, and borrowing power dries up.

But few firms have taken the step of purchasing an actual liquidator, which typically sell off assets of companies in major trouble, or in other cases, in the process of going belly up. So does Credit Suisse think the post-LBO credit crunch be worse than the market thinks? Well, at the very least, it’s betting on an uptick in demand for liquidators.

Over the past decade, Great American says it has become a leader in conducting liquidations for wholesale and industrial companies. Credit Suisse said the investment bolsters its leveraged finance business.

(Image credit: Reuters file)

     Even if you’re a bigshot on Wall Street, drugs will scramble your brain. Here’s a look at another side to Wall Street’s push to keep up record profits. Boom times are fueling drug use within investment banks. And it’s not just young analysts who are using.                      

On the flip side are the dealers feeding the drug use, who know how to market their product well. When they deal with their Wall Street clients, dealers wear nice suits and use preppy names such as “Nelson” to build their brand. It also helps them fit in better.

“My customers were all business individuals,” convicted drug dealer Juan Rodriguez recounted in courtroom testimony. “I didn’t deal with any street individuals, if you will. … I would create a, you know, take it away from the street image and create a business-like atmosphere so there would be no attention or no heat drawn to me.” 

Rodriguez said even as the price of cocaine escalated his clients didn’t complain. But when his supplier started diluting the purity of his onions (an ounce of cocaine), his clients howled that their highs weren’t as good as before.

Mental health experts who counsel Wall Street executives with drug problems say the pressure to perform can lead them to alcohol abuse, dope smoking, cocaine snorting and shopping for prescription drugs.

Wall Street has seen boom times and drugs before, but this time around, the prevalance of OxyContin (AKA hillbilly heroin) is a new twist for some guys and gals with loads of cash.

And you don’t need drugs for a meltdown. Sometimes anxiety and pressure will do a number on some of the Street’s rising stars.

David Becker was the global chief of Citigroup’s commodities desk when the pressure to meet targets led to cooking the books and a 15-month prison sentence. This didn’t happen overnight. He started seeing one psychiatrist for his anxiety in late 2001, or a few years before he got his top job.

He told his doctor about a painting he owned that depicted a man being pulled by all four limbs. He identified with this tortured man, the psychiatrist told the federal judge handling Becker’s case.

He later got rid of the painting.