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Merrill Lynch's CDO Sale

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?

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