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In my previous post, I discussed so-called “Business Leader Intelligence”, or BLI, and described why it could not have, and never will, prevent the kind of debacle we are currently experiencing. Since then, of course, many more words have been spewed by more influential writers than me along the same lines, including Gretchen Morganson’s detailed report on the Merrill Lynch collapse (”How the Thundering Herd Faltered and Fell”, New York Times Sunday Business, November 9, 2008).
One of the more damning, and least surprising, facts reported was that Ahmass L. Fakahany, a “former Exxon executive who oversaw risk management at Merrill, kept the [bond operations unit] machinary humming along by loosening internal controls…removing longstanding employees who ‘walked the floor,’ talking with traders and other workers to figure out what kinds of risks the firm was taking on. … [The] people chosen to replace those employees were loyal to [Stanley J.] O’Neal and his top leutenants. That made them more concerned about achieving their superior’s profit goals … than about monitoring the firm’s risks”.
Q.E.D.
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