Merrill Lynch CEO Retires

NEW YORK — The unfolding credit crisis has claimed its biggest corporate casualty so far: Merrill Lynch CEO Stan O'Neal.

The announcement Tuesday that O'Neal is retiring immediately came after the world's largest brokerage posted a $2.24 billion quarterly loss, its biggest since being founded 93 years ago. While a Merrill Lynch & Co. spokeswoman said O'Neal will receive no severance package, he could walk away with retirement benefits and stock awards worth more than $160 million.

Merrill Lynch did not name a replacement for O'Neal, whose ouster had been expected for days. Instead, board member Alberto Cribiore will step in as interim nonexecutive chairman and head the search for a new CEO. Cribiore, appointed to the board by O'Neal in 2003, founded private-equity investment firm Brera Capital Partners in 1997.

Despite the third-quarter loss, analysts consider the vast majority of Merrill's business to be in perfectly fine shape. But, whoever replaces O'Neal will have to clean up the segment that is not in good order — Merrill's investments in subprime mortgages and other risky types of debt.

Merrill Lynch warned in early October it would report a loss after taking a writedown of some $4.5 billion, blaming the declining value of bonds and other instruments backed by mortgages made to people with spotty credit. But it stunned Wall Street when, less than three weeks later, it acknowledged the writedown was actually $7.9 billion. O'Neal accepted blame for the discrepancy, which immediately led to calls for his ouster.

O'Neal, 56, who rose to power five years ago, was known for shaking up top management and putting a greater emphasis on riskier bets, rather than the safety of just selling stocks.