Bring Me the Head of Stan O'Neal

There was a movie made in the 1970's called "Bring me the Head of Alfredo Garcia." You can read about it here at the IMDB database. The movie starred Warren Oates as a bounty hunter, but maybe when they do the remake, they should be hunting the head of Stan O'Neal. Here are excerpts from his grilling by the analyst community courtesy of Seeking Alpha.

"If I can ask Stan, do you feel comfortable that there is not another shoe to drop and a lot more writedowns on the ABS CDOs?"

"We have tried to capture everything that we can capture at this point, in the market. The expectation for progression of these securities as of the date that we took the markdowns. I cannot tell you what the market trajectory might be from here, but as of the date that we took these markdowns, and even looking at it as we sit here today and observing the general environment, we are comfortable that we have marked these positions conservatively."

"How did you wind up with such a large concentration in the first place? I mean the number of employees is such a small fraction of the overall firm, and it results in results like this? I guess I am asking about risk management, and what went wrong and what happened in the last three weeks to wind up with $3 billion of additional charges?"

"The $3 billion in additional charges is taking a look at the methodology and going through the marking models, again, and coming to a conclusion that is still within the same range that we had before, but it was more appropriate to be at a more conservative end of the range than we had previously indicated. That is where the $3 billion comes from. Why do we have such a large position in the first place? We made a mistake. There were some errors of judgment made in the businesses themselves, and there were some errors of judgment made within the risk management function, and that is the primary reason why those exposures exist."

"On the $8 billion in losses, can you give us a feel for how much of that is realized versus unrealized?"

"I think we already said that we are not breaking that down."

"Can you give us some more comfort with your understanding of your current risk loss exposures? I'm having a little trouble with how you can feel that you understand your risk exposure, when September 28 marks deteriorated an extra 75% on you after the quarter closed?"

"It is because we have had some time to do a lot more work and we have reviewed the methodology, we have reviewed the pricing standards, we have reviewed the inputs and we have come to the conclusion that again, within the same range it is appropriate to mark it much more towards the more conservative end of the range."