Mopping up Merrill

On Saturday, John Thain, a 52-year-old electronic engineering graduate, takes charge of Merrill Lynch in the midst of the investment bank's biggest crisis in its 93-year history.

Merrill reported an $8.4 billion loss in securities and bad loans in October, one of the largest victims of the sub-prime mortgage crisis that has roiled financial firms across the United States in recent months.

One of Thain's first tasks will be to shore up Merrill's risk management procedures, which clearly failed in evaluating exposure to subprime mortgages and collateralised debt obligations. Then he will need to restore Merrill's credibility with investors, clients and regulators.

Given his background as a risk manager, Thain certainly has the pedigree to be Merrill's Mr Fix-It. He started out at the peerless investment bank Goldman Sachs as a mortgage bond trader, working his way up to chief financial officer, and then president. The laconic Harvard graduate then forged a reputation as Wall Street's most capable mop-up man at the New York Stock Exchange, turning the Big Board into a public company through its reverse takeover of the Archipelago electronic exchange, and then creating the world's first transatlantic bourse through a merger with Euronext.

Nevertheless, his first move at Merrill may be a cull of its fixed income staff. Insiders are betting on a round of bloodletting at Merrill, which employs 64,200.