• Too highly leveraged - It can't make money without borrowing $31 for every dollar of capital it holds. This is great when bets go the right way but it wipes out capital quickly when they lose.
• Gets taxpayers to bailout its mistakes - And when it loses money, it cries to Washington for a bailout. For instance, the Fed used $29 billion of taxpayer money to bail out Bear Stearns for its poor management.

Thain made a very unpopular decision -- to take $31 billion worth of those CDOs off Merrill's books at 22 cents on the dollar. That price tumbles to 5 cents when you consider that Merrill financed 75% of the deal. I have not heard any reports that the Merrill bankers who took those CDOs onto Merrill's books ended up paying back their bonuses. So who exactly is paying the price for Merrill's mistakes?

Wall Street operates on information asymmetry -- that's an academic term which means that the sellers know more than the buyers. And the buyers use that superior knowledge to their negotiating advantage. The miracle is that Wall Street gets people to pay brokers so they can profit from the information asymmetry between the brokers and their customers.

When brokers at Merrill told its wealth management customers that the ARS Merrill was eager to dump from its books was a good investment, it was using that information asymmetry to benefit Merrill at the expense of its customers. The Boston Globe reports that Merrill's ARS trading desk threatened to fire analysts who wrote research reports that pointed out ARS risks to investors. The result? The Globe reports "Merrill sold $95 million in [ARS] to 165 [Massachusetts] investors in January and February, even as executives knew the market could fail."

And wealth management is the core business that Thain hopes investors will now focus on. As the Times says, "He believes Merrill is well positioned for the coming years because several of its businesses, like wealth management, do not depend on borrowing - or leverage, as the industry calls it."

But convincing people to let Merrill manage their money depends on trust. And after the ARS scam, how will Merrill rebuild that trust? The same might be said for much of Wall Street. So perhaps it would be useful to let Wall Street fend for itself instead of accepting the idea that we can't afford to let it fail. If I make a bad investment, I don't come crying to the government to bail me out. Why should it be any different for the masters of the universe?

So maybe Wall Street should change. Either its capital and business mix becomes regulated by independent regulators. Or it cuts itself off completely from the public so that investors don't have to pay for its mistakes. It's definitely time for a change.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Merrill Lynch securities.