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The New York Times reports that Merrill Lynch & Co. (NYSE: MER) CEO Stan O'Neal is out. The company has not picked a replacement, but O'Neal will not keep his job, after the brokerage took an $8.4 billion charge for failed credit and mortgage-related investments in the third quarter.

But one has to wonder why he should be the one to take the fall. His peers at Citigroup Inc. (NYSE: C) and Bear Stearns Cos. (NYSE: BSC), both of which also took huge write-downs, are still employed.

O'Neal was a product of his times. He saw that Merrill did not make as much money as it could, so he pressed the firm more deeply into investment banking and underwriting debt for LBOs. The firm began to invest more for its own account and some of those investments were risky.

O'Neal was a brutal cost-cutter and was willing to fire those closest to him if it suited him. His strategy improved the firm's profits and share price, but he cared nothing for what it cost in morale. He most likely ended up with few allies within his own company. Being a friend was too dangerous.

Merrill's stock price was $35 in early 2003. In January of this year it traded near $100. Even after all the earning trouble, the share price has doubled in under five years.

Last year, Merrill had net income of $7.5 billion, well above the $4.4 billion in 2004.

But, losing $8.4 billion is unpopular, so whatever O'Neal had done for the firm in the past has been forgotten.

Douglas A. McIntyre is a partner at 247wallst.com.