Merrill Lynch

Looking at maybe doing a merger arb trade on this deal. Spread is at nearly 18% today, up from about 12%, where it had been for a few weeks.

Anyone have any idea why? Any thoughts on this trade?

Is this for real? How can this guy get away with this with so much press? I can understand a government bailout, but taxpayer money going toward this?

This briefly came to mind when the merger was announced, but the curiosity has gotten the better of me, so I'm hoping the experts here can shed some light on this.

If some of you recall, FT (amongst others) ran an article in mid-August describing how Merill booked their credit derivative losses ($29B or so worth) though their UK subsidiary, where net losses can be carried forward to future years as a tax credit. (article here: http://www.ft.com/cms/s/0/369b723e-6a52-11dd-83e8-0000779fd18c.html)

After the merger, what becomes of this credit? (arguments against the validity of this accounting trick aside)

I'm assuming this will depend in part on the way the UK entity now fits inside the global corporate structure, something which I admittedly know next to nothing about right now.

Just a few weeks after announcing their takeover of Merrill Lynch, Bank of America has reportedly settledon an $8.4 billion dollar payout to clean up the mess made by Countrwide Financial Corp, which they acquired just a few months ago. Apparently the subprime lender got into some hot water with alleged predatory lending practices, and was sued by 11 states. Looks like the gem they thought they were getting is turning out to be a money pit of sorts.

I’m just wondering, with the big doings with Merrill, and now this massive lawsuit, does BofA have what it takes to keep their head above water? Or are we going to see another headline about a failed financial giant in a few months?

Well, I don’t know about you, but I know I’ll be able to sleep better at night now knowing Merrill’s John Thainwill being staying on after the BofA acquisition. He’ll be the new head of Investment Banking and is supposedly going to be the successor of BofA CEO Ken Lewis. I mean, who cares about the 27,000 employees rumored to be heading to the unemployment line in a few months? And that’s just at BofA. Who knows how many “little people” from Merrill will be sent packing. But, rest assured, one of the billionaire bigwigs is safe. I for one feel so much better.

Experts are estimating that with Bank of America’s recent purchase of Merrill Lynch, approximately 27,000 employees will be sent packing(nearly 10% of the total workforce). Although most of the slashes will be to back office operation reps, The Charlotte Observer reports that a decent chunk of those possibly heading to the unemployment line are the investment bankers, simply because Merrill has a better known name in the business. BofA is aiming for a savings of $7 billion, so BofA employees better brace themselves for what the grim future may hold.

Warren Buffet invested $5B in GS after it became a bank holding company.

If Bear Stearns shored up capital and didn't face insolvency prior to being bailed out, would it have prevented Lehman from going under? Would it have stopped the domino effect or would it have been something like final destination where death skips over the one firm and move onto to the next in line?

Wanted to see what you guys thought about it. If Bear didn't go down by receiving an investment from WB, would that have made it easier for Lehman to raise capital thus preventing its downfall?