Tragic Fall Of Merill

The Tragic Fall of Merrill Lynch
When I was a stock broker in the late 1990's Merrill Lynch was one of a select few of investment firms along with Goldman Sachs, Paine Webber, Morgan Stanley, and a few others that made up the gold standard of investment firms. Today, their existence was put to a merciful end when Bank of America agreed to buy it out.
Bank of America on Monday began adding another slice to its growing financialservices empire, buying Merrill Lynch in a $50 billion deal that would create a bank offering everything from fixed-income trading to credit card lending.

It will rival Citigroup Inc., the biggest U.S. bank in terms of assets.

Bank of America Corp. said early Monday it would acquire Merrill Lynch in an all-stock transaction worth about $50 billion that should lift the uncertainty shrouding Merrill since the start of the credit crisis over a year ago.

A few weeks ago, we knew trouble was brewing when Merrill dumped billions worth of mortgages at an obscenely low price.
Merrill has agreed to sell $30.6 billion of its repackaged debt, known as collateralized debt obligations — generally suspect and subprime mortgages — for 22 cents on the dollar. Private equity fund Lone Star Funds is the buyer.

So, how did this once financial giant suffer such a monumental fall? The story of Merrill Lynch's downfall is embedded in one of the worst acquisition strategies in the history of mergers and acquisitions. In September of 2006, Merrill Lynch bought up First Franklin..
Merrill Lynch (NYSE: MER) today announced an agreement to acquire the First
Franklin mortgage origination franchise and related servicing platform from National City Corporation (NYSE: NCC). Under terms of the agreement, Merrill Lynch will pay a $1.3 billion purchase price for San Jose, Calif.-based First Franklin Financial Corporation, and affiliated business units National City Home Loan Services, Inc., and NationPoint.

First Franklin is one of the nation's leading...