Merrill Lynch CEO's job is on the line

— -- O'Neal's departure, if it takes place, would make him by far the most prominent victim on Wall Street of the fallout from the collapse of the subprime mortgage market this summer. O'Neal's likely ouster was reported Sunday by The Wall Street Journal and The New York Times. The reports were attributed to people familiar with the matter, and USA TODAY could not confirm those reports.

His likely fall from one of the highest positions in the financial world was swift and, until last week, unexpected. In early October, Merrill Lynch announced it would write off $4.5 billion in bad debt that it had accumulated through investments in the subprime mortgage industry. Other big investment banks have also announced billions of dollars in write-offs.

But last week, Merrill Lynch surprised the market by increasing its write-off for the quarter to $7.9 billion. During a conference call with analysts, O'Neal admitted that Merrill Lynch had plunged too far into the subprime market.

Several analysts questioned O'Neal and his management team persistently, asking if there were any other surprises on Merrill's balance sheet. During the call, which seemed to leave some analysts unconvinced that the worst was over, Merrill's stock price dropped 6%.

The bad news didn't end there. On Friday, The New York Times reported that O'Neal had broached the subject of a merger with G. Kennedy Thompson, CEO of Wachovia. According to that report, Merrill Lynch board members were furious that O'Neal would make such a proposal without consulting them, at a time when the company's stock price was slumping.

Jessica Oppenheim, a Merrill Lynch spokeswoman, said the company would not comment on anything relating to the board and O'Neal, including whether or not there was any discussion with Wachovia.