Merger of Two Unequal?

A little rationale sense would go a long way in explaining the current carnage at Citigroup and Merrill Lynch. So would some humor. Unfortunately neither is in current supply.

Before we try to insert any, here's an idea: Merge the two unequal on their way down. Or better yet, invite Bank of America to make bids on Merrill and then merge the combined entity with Citigroup. Mother Merrill always wanted to be the world's largest bank so why not give them their chance? If the supermarket approach to banking can really work, then this chain of events would quickly reveal the strategy's viability. Otherwise it's time for an alternative preferably one without interim CEOs or what http://www.breakingviews.com/ calls "need for a plumber." Sorry, but the last time that term was used in such a high profile story was when a few rogues were breaking into Watergate.

What we don't know or can't seem to figure out is why Merrill and Citigroup would act so rashly without a clear successor or even candidates in waiting to take over from O'Neal and Prince, respectively. It's not entirely explainable by lack of succession planning although that's clearly a rationale reason worth reporting.

So is the involvement of former Treasury Secretary, newly installed Chairman Robert Rubin who will now lead an effort to find a new CEO at Citi. There's only one slight problem. He fully endorsed Prince's strategy and doesn't seem to think anything is wrong about the current direction. Okay, fine. But then why push Prince to resign? To satisfy a few investment crazies mad about sub-prime? Aren't boards supposed to stand up to pressure and present continuity vs. desperation?

If anyone thinks Rubin is the type of guy who will roll up his sleeves to get a solution in place, then they need to go back and read Ken Auletta's list of works more closely. But wait. It gets better. According to The Wall Street Journal, the only other person on the Citi board with banking experience is Dick Parsons, current head of Time Warner who used to run a small investment firm earlier in his career. Sorry, but we don't think the Cable Guy qualifies as a handpicker of talent to rescue a structured investment mess. Not to mention the overseer of his own semi-failed strategy. Where's Carl Icahn when you need him?

Meanwhile, the Merrill board is probably letting out some cigar air somewhere praying that they'll stay out of the fray. But that's wishful thinking. Their board is even more in-bred and will have a hard time convincing anyone qualified for the CEO position that they'll step aside for the right person.

Both of these major institutions have dropped the ball. And since it's football and CEO turnover season, it's a safe bet that their fumble will stay live on the ground for awhile.

Perhaps the high heeled boys of Wall Street could take a cue from their burger, fries and shake brethren at McDonald's? Now there's a succession success story. Not even death of a leader could stop this brand from marching onward and upward.

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