Merrill Lynch ousts CEO O'Neal

By Tim McLaughlin

NEW YORK (Reuters) - Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research, Stock Buzz) ousted Chairman and Chief Executive Stan O'Neal on Tuesday, just days after reporting the biggest quarterly loss in the company's history, making him the highest-ranking casualty in the U.S. subprime mortgage crisis.

The world's biggest brokerage said board member Alberto Cribiore will serve as interim nonexecutive chairman while day-to-day operations will be overseen by Merrill's current co-presidents, Ahmass Fakahany and Greg Fleming.

Cribiore, founder of private equity firm Brera Capital, will chair a search committee to find a permanent successor to O'Neal. The committee will look inside and outside the company, Merrill said in a statement.

Fleming's duties include oversight of company risk management, a task previously associated with Fakahany, who the company said will lead global support, finance and human resource functions.

Merrill shares dropped 3 percent as investors may have been disappointed that a permanent replacement was not named.

Merrill still faces critical challenges because it remains exposed to $20.9 billion in subprime mortgages and collateralized debt obligations.

Some analysts estimate the company might have to write down those assets anywhere from $4 billion to $5 billion further.

Speculation that O'Neal would be ousted mounted after the company last week reported a $2.3 billion loss for the third quarter, mostly because of bad bets on securities tied to risky subprime loans. The loss was several times bigger than what O'Neal forecast earlier this month.