Wow. I am gob smacked.
Understand what this means. Merrill has basically given up on raising capital. Instead they’ve collapsed into the depositor base of BofA. This is Banking 101. ML, Lehman and other primary dealers are essentially saying they cannot attract funds on their own, that they need the money that is on deposit from retail banking. This is a huge, huge deal. There maybe no such thing as investment banking in a couple of weeks.
Lehman may go bankrupt. Merrill has ceased to exist with this move, a move I guarantee that the Federal Reserve has brokered with lotsa cash and goodwill for BofA. This is an earthquake on the worldwide financial markets, which will react negatively in the short term.
For BofA, who knows? It has long wanted to get into investment banking in a big way, but like we said, that business may be dead.
