From: Reuters
Published January 28, 2008 11:16 AM

Merrill chief of U.S. CDO research resigns: sources

NEW YORK (Reuters) - Lang Gibson, a member of the team that helped Merrill Lynch & Co Inc <MER.N> become the No. 1 issuer of collateralized debt obligations, has resigned, people familiar with the situation said, as a CDO-related credit implosion roils banks worldwide.

Gibson, who headed Merrill's U.S. CDO research, resigned last week, people familiar with the situation said on Monday. Merrill Lynch declined comment.

Under Chris Ricciardi, then head of global structured credit products, Merrill Lynch became the top CDO issuer, only to see the strategy backfire when the market for CDOs dried up. Rising defaults on risky U.S. subprime mortgages, which were used as collateral for many CDO issues, accelerated the CDO market's tailspin.

Ricciardi no longer works for Merrill, which was the top CDO underwriter from 2004 until mid-2007 when the market began its meltdown.

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Merrill recorded about $24 billion in write-downs during the second half of last year as it underwent a painful unwinding of its CDO exposure.

CDOs are debt instruments that can be backed by different pools of collateral, including bonds and asset-backed securities. Investment banks sliced up the CDOs into different tranches that offered investors various levels of risk and return.

Gibson produced research for Ricciardi's team and wrote an update called "CDOs - A view from the tranches."

Before joining Merrill Lynch, Gibson was in charge of global structured credit research at Banc of America Securities for four years.

(Additional reporting by Al Yoon in New York)

(Reporting by Tim McLaughlin, editing by Mark Porter/Gerald E. McCormick)

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