The belongings of CDOs comprise some of the most high-risk tranches of mortgage-backed securities largely tied to subprime mortgages. With a large variety of CDOs that had diminished dramatically in value, Merrill Lynch was caught with decreasing liquidity in the summer of 2007 and the collapse of the subprime mortgage market.
Disappointed with chief executive Stanley O'Neal's leadership, the administration of Merrill Lynch called for a succession of meetings to evaluate the firm's exposure to subprime-backed CDOs and redefine its risk-management policy. To the administration, an uncomfortable write-down seemed unavoidable for the third quarter of 2007, but much of such possessions should be printed down and how rapidly? What would be the propositions for the business in making this kind of announcement?
PUBLICATION DATE: October 23, 2008 PRODUCT #: HKU795-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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