Once-Proud Wall Street Banks

Just didn't get enough the first time around, eh? Bloomberg (01.11.08):

"Bank of America Corp., the biggest U.S. bank by market value, agreed to buy Countrywide Financial Corp. for about $4 billion, five months after making a money- losing $2 billion investment in the unprofitable mortgage lender."

Bank of America to Acquire Countrywide for $4 Billion

Some were skeptical. "'I hope Bank of America isn't throwing good money after bad,' said Eric Schopf, a fund manager at Baltimore-based Hardesty Capital Management LLC, which owns 216,000 Bank of America shares, before the takeover announcement. 'They struck a deal that wasn't very attractive. Hopefully they can get it right the second time around.'"

We shall see.

In the meantime, NYTimes (01.11.08):

"Merrill Lynch is expected to suffer $15 billion in losses stemming from soured mortgage investments, almost double its original estimate, prompting the firm to raise additional capital from an outside investor.

Merrill, the nation’s largest brokerage firm, is expected to disclose the huge write-down when it reports earnings next week, according to people who have been briefed on its plans. The loss far exceeds the $12 billion hit many Wall Street analysts had forecast."

Giant Write-Down Is Seen for Merrill

"To shore up its deteriorating finances, Merrill is now in discussions with investors in the United States, Asia and the Middle East, including American private equity firms, to raise about $4 billion in the coming days, these people said."

"The developments underscore the rising toll that the mortgage crisis is taking on many once-proud Wall Street banks. In recent months Merrill and several other firms have grabbed financial lifelines from wealthy foreign governments."