naked capitalism

a says:

“This does lend credence to the view that things at Merrill are as bad as the worrywarts thought.”

I think it’s more realistic than anything. MER is next in sight of the shortsellers. Thain knows this and wants to sell now to get something for the shareholders. A smart move. BofA gets a better IB than Lehman. Also a smart move. BofA is too big to fail; if things turn out badly, with Countrywide and Mer, then they will get bailed out, so the downside is limited.

Yves Smith says:

a,

I don’t disagree. Thain does not have ego in having Merrill survive as an independent entity, as Fuld did, and he is more conservative by temperament (I worked with him briefly early in our respective careers). But conversely, this also says that he thinks the odds of Merrill not making it are high enough that a sale is the best option. It may be that he realizes the that odds of a Roubini-esque run on brokerages is real. I had people months ago, long before Merrill in particular was a focus of concern, asking whether it was safe to keep their accounts there. That says that nervousness about the securities industry is widespread.

mxq says:

If MER needs capital, Thain should get the boot. They should’ve just done a 50% equity raise back in July – I have no idea if Temasek wanted it or not, but either way, they’re now at a 50% discount to post-July capital raise levels. Unbelievable.

Even worse, Thain goes on CNBC and says “as of this exact millisecond, we are well-capitalized.”

Great…thanks, John. Now, given you are CEO, do you mind telling us how well you are capitalized for, say, tomorrow, or maybe a month from now…you are capable of thinking beyond the current millisecond, aren’t you?

Maybe not.

Abbott_Of_Iona says:

If BoA are doing a deal with Merrill it is clear the Lehman are going into BK.

Merril were next.

That's were Hank is going to use the last shot of his bazooka.

Roubinni(?) is right. The is the meltdown of the secondary banking system.

Do BoA have ehough capital to bail out Merrill?

Have the Fed & Treasury both run out of money.

Japan & China may be closed tomorrow. But they will wake up on Tuesday.

s says:

yes agreements inplace for Bloom. Not Black due to credit rating issues. AIG now reported to be moving money from reg subs to the holdco. calling bs on MER/BAC rumor

Been there says:

I heard one of the commentators on the Cavuto Business Report state a few minutes ago that it didn’t make sense that BAC would offer $25 to $30 per share for Merrill when Merrill finished below $20 on Friday. He further stated that he thought there was some misrepresentation/ or other problem with the published purchase price.

How ‘bout this. My understanding is that the purchase is an all stock purchase. BAC sees the purchase as fair in terms of what its own share price might fall to when the falling dominoes reach their front door- if they sit tight and choose to do nothing. Smart play for them(while their stock still has some value) is to grow BAC large enough(by absorbing Merrill) so that the Feds are forced to step in and backstop them. The purchase price offered by BAC says a lot more about what BAC thinks its own ultimate share price may be worth if they were subsequently targeted by the shorts. Ultimately, increasing the likelihood of Fed backing reduces the threat posed by the shorts.

Wish I were wrong because this argument implies nothing more than pure desperation on BAC’s part.