Merrill Lynch is looking like a real dog these days — much more than I realized back in September. They were obviously bankrupt, much as Lehman Brothers was. As bearish/cautious as I have been on the economy and the financial sector, obviously I was not bearish enough. When the Bank of America – Merrill deal got done, I had this to say:
Merrill shrewdly dialed up Bank of America, in fear for their own continued existence. They have been able to strike a deal – and at a decent price. Notch one up for John Thain.
Bank of America made a big mistake in buying Countrywide Financial — one that they will regret for years. Buying Lehman Brothers would have been even more disastrous given their exposure to Commercial Real Estate. But, this deal is good for several reasons. It is better for Merrill than BoA though, as it is a premium to book value and the current stock price.
The Merrill deal is much better than a potential Lehman deal.
Better than Lehman? That’s not saying much. Obviously, I was out to lunch on this one. Lesson learned.