Merrill Lynch CEO Retires

That strategy — which handed Merrill Lynch record results during the market's peak — came with a heavy cost during the tumultuous third quarter.

With his retirement, he becomes the biggest executive casualty of the credit crisis that swept global markets this summer. Within minutes of announcing his departure, O'Neal's profile on the brokerage's Web site was wiped.

"Mr. O'Neal and the board of directors both agreed that a change in leadership would best enable Merrill Lynch to move forward and focus on maintaining the strong operating performance of its businesses, which the company last week reported were performing well, apart from sub-prime mortgages and CDOs," Merrill Lynch said in a statement.

CDOs, or collateralized debt obligations, are complex instruments that combine slices of different kinds of risk. It was Merrill's bet on CDOs, and the subprime mortgages underpinning many of them, that proved to be O'Neal's downfall.

Analysts have said this week that whoever replaces O'Neal may have to write down another $4 billion worth of bad investments in the fourth quarter.

In the meantime, co-presidents and chief operating officers Ahmass Fakahany and Gregory Fleming will continue in their current positions. However, their duties will be split — with Fleming in charge of Merrill's front-line businesses, such as its brokerage and investment banking sides.