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Merrill Lynch's CDO Sale

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In addition the sale of new stock, Merrill Lynch announced last night that it was selling CDO assets that had once been on the books at over $30 billion for just $6.7 billion, twenty-two cents on the dollar. What's more, Merrill itself is financing 75% of the purchase. That means that Merrill took in just $1.7 billion in cash for the assets it once said were worth $30 billion.
Perhaps the most troubling aspect of the sale is that just a couple of weeks ago Merrill marked these CDOs at $11 billion. If Merrill's CDOs can lose 40% of their value over a couple of weeks, how confident can anyone be in their other marks or the marks of other investment banks?