Bank of America / Merrill Lynch Watch (Feb 09)

Ho Ching announced her retirement last weekend. This blog post tracks one of the disastrous investments that she will leave behind at Temasek. Good luck, Chip Goodyear. You're going to need it =)

For Bank of America and Merrill Lynch, Love Was Blind (NYT) "But the merger, in which Bank of America agreed to pay about $50 billion in stock for Merrill, soured at light speed. Back then, the combined companies would have been valued by the stock market at about $176 billion. Today, the combination has a market capitalization of only $39 billion."

“When you go into a deal, you hope for the best but expect the worst,” says Nancy Bush, a banking analyst. “I think Bank of America did plenty of due diligence; they just ignored what they found. They knew it was there. They just didn’t completely grapple with the fact that it could get uglier. And it did.”

Bank of America CEO Close to the Edge (Reuters) "This guy's job is on the line, and he knows it," said Paul Miller, an analyst at Friedman, Billings, Ramsey & Co. "He's trying to outrun the recession, and praying things will be better in the second half of the year. It's going to be a slow process, but given the mistakes Ken has made, it will be difficult for him to keep his job during the year."



Bank Of America Hits Multi-Decade Low On Nationalization Fears "Shares of Bank of America Corp. briefly dropped to their lowest level in more than two decades Thursday on concern the U.S. government may nationalize the banking giant to help stabilize the broader financial system"

Can BofA Save Itself? (LA Times) The bank's swoon "has crippled us financially," said Corbin, 67, a retired hospital maintenance supervisor. The stock he and his wife own, once worth $50,000, has shriveled to $5,000. He fears a federal takeover or shutdown could vaporize their remaining holdings, which happened last year to shareholders when IndyMac Bancorp and Washington Mutual Inc. failed.

"It'd be a total wipeout, with just micro-pennies left to the dollar for investors," Corbin said. "Our shares would be worth absolutely zilch."

...

But he said the Merrill purchase was a grave error because the Bank of America chief knew little about the securities business.

"It's when you start buying stuff you don't know anything about that I have a problem," Narter said. "Banc of America Securities is not a world-class investment bank. Their purchase of Merrill was a big -- and expensive -- learning experience."

Lynched at Merrill (FT) "But after 13 months during which Mr Thain evidently crossed, belittled or antagonised subordinates at Merrill and then at BofA, one more pertinent question might be whether there was anyone left in upper management who did not cheer his ousting last Thursday. Another is whether he was indeed, as portrayed, the visionary architect of September’s deal with BofA. According to several executives involved in the matter, Mr Thain had to be forced into those negotiations by Hank Paulson, then Treasury secretary and his old boss at Goldman."