Those Tricky Merrill Losses

The Financial Times reminds us today that those last minute Merrill losses almost derailed the Bank of America deal, and wonders how deeply our favorite exec was involved.

Bank of America was directly involved in markdowns that contributed to Merrill Lynch's $15.3bn loss in the last quarter of 2008, its final reporting period before the Wall Street bank was acquired by BofA, sources familiar with the matter say.
Mounting losses at Merrill during December almost derailed the acquisition. Ken Lewis, BofA's chief executive, threatened to walk away from the deal unless the US government provided $20bn in extra capital. The deal closed on January 1 after federal officials pledged their support.

And on those shifty credit default swaps?

Mr Cotty also gave his blessing to a $1bn writedown of credit default swaps involving investment grade companies. The markdown of a position on the "high vol 4" index transformed a gain of $100m into a loss of $900m, said a source familiar with the matter.

Ouch.
BofA linked to Merrill writedowns [The Financial Times]