Bank of America, Merrill Talk Merger , Lehman Brothers will be left to Chapter 11.

[FogerRox]

Rumors that Merril Lynch was next appear to be true.

Bank of America in talks to buy Merrill

Bank of America last night entered into formal merger talks with Merrill Lynch just as Lehman Brothers struggled for survival during one of the most astonishing periods in Wall Street history. The predicament of two of the world’s largest banks represented the latest bloody episode of the credit crisis which erupted on Wall Street just over a year ago.

Bank of America at the weekend approached Merrill Lynch after its attempts to acquire part of the struggling Lehman Brothers appeared unfeasible. It is believed that Merrill Lynch is demanding a price of about $40 billion (£22.3 billion), well above its depressed $26 billion market value.

Bank of America’s interest in Merrill Lynch emerged amid a weekend of turmoil for Lehman Brothers, the investment bank’s smaller Wall Street rival.

After talks between the Korean Development Bank and Lehman Brothers broke down, Germany urged the US to find Lehman Brothers solution. Prior to weekend meetings between the Treasury Secretary Paulson , and President of the New York Federal Reserve Bank, Mr Paulson had let it be known that he was adamant Lehman would not be saved with government money.

Lehman Brothers and Merrill Lynch's lost weekend


To lose one major investment bank in the course of a weekend, to paraphrase Oscar Wilde, might be considered a misfortune. To lose two looks dangerously like a catastrophe.

By Sunday night, after a tumultuous weekend of round-the-clock negotiations orchestrated by the US Federal Reserve and the Treasury, it looked likely that Lehman Brothers and Merrill Lynch, two of America’s most famous financial names, would cease to operate as independent institutions at the opening of business this morning.

That would mean Wall Street may have just had its most extraordinary weekend in at least the last 50 years, with the worry that even worse may still be to come.

What a Lehman Bankruptcy Filing Might Look Like


If Lehman were to go down this route, its parent company, Lehman Brothers Holdings, would file for Chapter 11 bankruptcy protection, giving the firm more latitude and time in dealing with its creditors.

Financial services firms face harsher treatment under federal bankruptcy rules. Registered broker-dealers must file under Chapter 7 rules, which are the procedures for liquidation, under the assumption that it is the best way to protect customers. The Securities Investor Protection Corporation would handle the liquidation of such brokerages, and bankruptcy lawyers say that customers are likely to receive their holdings back.

Another issue facing Lehman is that the U.S. Bankruptcy Code does not place an automatic stay on the seizing of collateral used in complex financial instruments like credit default swaps. Normally, creditors owed money for loans or bonds are prohibited from immediately seizing collateral when a company files for bankruptcy, as was the case with Drexel.

[skids]

1. Quick! While all the Repuke day traders are distracted...

..rescuing their portfolios: take over the Internet. Take the day off. Rate everything up you can find. DIGG, reddit, post, comment!

Wouldn't it be funny when they get back to YouTube after the ashes are settling if it was completely overrun?

:evilgrin:

[Kurt_and_Hunter]

2. WSJ reporting the BAC buy of Merrill went though at 44Billion

[abumbyanyothername]

4. This is bad for BAC. nt.

[BumRushDaShow]

3. Looks like the BOA deal to buy Merril Lynch is done.

http://online.wsj.com/article/SB122142278543033525.html?mod=special_coverage

[FogerRox]

5. Banks with huge current writeoffs, over 500 BILLION DOLLARS

# Deutsche Bank - $155.1B
# Citigroup - $144.5B
# Credit Suisse - $94.5 B
# Goldman Sachs - $84.2B
# Bank of America - $51.3B
# Wachovia - $50.5B
# Royal Bank of Scotland -$41.7B

[BumRushDaShow]

13. Unbelievable and they are not done yet. n/t

[On the Road]

6. I Have to Tell You,

I am very impressed with Paulsen's handling of this crisis. FNMA and FRMC were deprivatized, which was necessary. But Paulsen didn't just panic and open the taxpayers' checkbook. I would have understood a bailout, but he wanted to make sure that there was market responsibility for these smaller failures.

I don't think Bush chose Paulsen and Bernanke on his own. I see the hand of Bush Sr and his economic advisers. It is very fortunate that loyalist hacks weren't put in these positions. And it's one more reason not to vote for McCain, who if anything is even more clueless than Bush.

[FogerRox]

7. What? All he has to do is have enough money printed...

and picked who gets bailed out. Lehman...no........ Merril.. yes.

[On the Road]

8. He's Not Having any Money Printed

He took the appropriate actions in each case -- not rewarding failure while doing what's necessary to prevent a credit crisis. You might have thought that coming from the finance industry Paulsen would given them whatever they asked for but he hasn't done it. He is showing leadership and seems to take his job seriously.

[FogerRox]

9. Dont insult me. the money supply is being jacked up

Paulson is managing it so the shit hits the fan during Obamas first months in office.

Take your spin and leave, Paulson is a thug.

[On the Road]

11. If I Had Wanted to Insult You,

I could simply note that you don't seem to understand the difference between Treasury and the Fed.

Or that the US does not simply print money like a Banana Republic.

Or that a more accommodating monetary policy was for over a century considered part of a progressive agenda.

Or that Paulsen is specifically NOT doing Wall Street's being, despite his background.

Or that NOT intervening would have pretty much ensured that the "shit hits the fan."

[FogerRox]

12. .

[Raineyb]

14. Perhaps I'm daft but why did the taxpayers bail out Bear Stearns an non FDIC investment bank?

And why is this appropriate?

This is why we need Glass-Steagall back.

Regards

[kentuck]

10. This is HUGH! I am SERIES !

The stock market should be interesting tomorrow? Keep your eye on the financial stocks to see which ones are selling and you may able to predict the next one to go under?

[FogerRox]

15. Look at Citicorp & Goldman sachs