{"id":308646,"date":"2010-02-11T10:40:45","date_gmt":"2010-02-11T15:40:45","guid":{"rendered":"tag:business.theatlantic.com,2010:\/\/3.35769"},"modified":"2010-02-11T11:04:10","modified_gmt":"2010-02-11T16:04:10","slug":"more-gossip-from-the-bank-of-america-merrill-lynch-merger","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/308646","title":{"rendered":"More Gossip from the Bank of America-Merrill Lynch Merger"},"content":{"rendered":"

In Hank Paulson’s new book On the Brink<\/i>, the former Treasury secretary reveals more information about the bizarre union of Bank of America and Merrill Lynch. I knew Bank of America CEO Ken Lewis was nervous about the deal and tried to back out of it in December. Here’s what I didn’t know.<\/p>\n

From a first read by WSJ editor David Wessel<\/a>:<\/p>\n

In October 2008, after the government had pumped money into BofA,
\nMerrill and other big banks, Lewis confided to Paulson that he was
\nworried Merrill CEO John Thain would try to wiggle
\nout of the deal<\/b>; he wanted Paulson to insist that Thain go through with
\nit. Paulson says he never mentioned the call to Thain. Less than three
\nmonths later, of course, Lewis would talk about backing out of the
\ndeal, completing the purchase under pressure from Paulson and Bernanke.\n<\/p><\/blockquote>\n

John Thain was about to back out of the merger in October? I’ve covered this topic for a few months now and I spoke with a source close to Thain<\/a>
\nat the time of the deal, but I’ve never heard that story. There are at
\nleast two reasons to question either Lewis’ statement or Paulson’s
\nrecounting. First, Merrill was days away from bankruptcy when Bank of
\nAmerica agreed to buy the company for a rather generous $50 billion, 86
\npercent of BofA’s stock price. Merrill’s precariousness was no secret,
\nespecially to Thain who had been brought in to save the company from
\nits increasingly likely demise.<\/p>\n

More importantly, two months after this conversation, Lewis went to DC
\nprecisely to “wiggle out of the deal.” To be sure, by December
\nMerrill’s fourth quarter writedowns had quadrupled, from $3 billion to
\n$12 billion (and they would finish the quarter at negative-$15
\nbillion). But Thain knew the losses would be excruciating, my Merrill
\nsource told<\/a>
\nme. That’s why he had no recourse but to merge with a commercial bank
\nand why lawyers wrote an airtight MAC (material adverse change) clause
\nto keep Bank of America from using deteriorating losses as an excuse to
\nback out of the deal. It’s puzzling to imagine Thain would be looking
\nfor the escape hatch in October, as well.


\n

\n Email this Article<\/a>
\n Add to digg<\/a>
\n Add to Reddit<\/a>
\n Add to Twitter<\/a>
\n Add to del.icio.us<\/a>
\n Add to StumbleUpon<\/a>
\n Add to Facebook<\/a>
\n

\n\"\"<\/a>
\n\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

In Hank Paulson’s new book On the Brink, the former Treasury secretary reveals more information about the bizarre union of Bank of America and Merrill Lynch. I knew Bank of America CEO Ken Lewis was nervous about the deal and tried to back out of it in December. Here’s what I didn’t know. From a […]<\/p>\n","protected":false},"author":1534,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-308646","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/308646","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1534"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=308646"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/308646\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=308646"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=308646"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=308646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}