This is terrifying! Merrill falls to loss on $7.9bn writedown

[WhiteTara]

The costs of the credit squeeze mounted on Wall Street on Wednesday as Merrill Lynch revealed a "staggering" $7.9bn writedown on mortgage-backed securities and Bank of America said it was cutting 3,000 jobs, mainly from its investment bank.

The Merrill losses were the biggest reported by any bank since the credit turmoil began, and BofA's layoffs were the deepest so far on Wall Street, raising fears that there was more pain to come.

Merrill's writedown was $3.5bn more than it had predicted less than three weeks ago. Analysts said it raised serious questions about Merrill's risk management and the strategy of Stan O'Neal, its chief executive.
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The losses dwarfed those reported by other banks, including BofA, which announced a shake-up of its investment bank that included the departure of its head, Gene Taylor. BofA flagged the cuts last week when Ken Lewis, chief executive, said he had had "all the fun" he could stand in investment banking.

Overall, Merrill reported a pre-tax loss of $3.5bn for the third quarter after total writedowns of $8.4bn, equivalent to 20 per cent of the group's equity capital.
there's more
I am gasping for air!

[Swamp Rat]

1. The Invisible Hand crusheth!

[SoCalDem]

2. Ahh. all good ponzi schemes eventally collapse..

Amazing, isn;t it? We have suce EXPERTS on the tv 24-7-365 "advising us all, and yet the cannot seem to figure out something so simple as a ponzi scheme.. 5th graders understand how they work:)

[DCKit]

3. I'm not a banking professional, but saw this crap coming down the pike five years ago.

You can't give specious and exploitative mortgages to people who can't afford them and expect it to turn out well.

How DARE they act surprised. Who did they think was going to bail them out? The government sure as hell can't afford to now.

[Tesha]

4. After all, the government "drowned in a bathtub" last year. (NT)