US Financial Crisis: The Fall ofMerrill Lynch
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Code : ECC0024
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Region : US |
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Brief History of Merrill Lynch A great market philosopher who predicted the 1929 'Great Depression', Charles E. Merrill opened a wealth management firm in his name at Wall Street in 1914.7 It was renamed as Merrill, Lynch & Co., (Merrill, Lynch) in 1915 following the joining of his friend Edmund C. Lynch. After 6 years, the company bought a French company's motion picture production unit based in New York, Pathe Exchange, Inc., the precursor of RKO pictures. In 1926, Merrill, Lynch purchased a controlling stake in Southern California-based grocery chain, Safeway Stores and transformed that into the third-largest grocery store chain in US by early 1930s... Involvement of Merrill Lynch in Mortgage Crisis Merrill Lynch's entry into the lucrative mortgage business began in early 1980s. Till 1997, the firm got benefited by its operations like raising loans for mortgage-backed Collateralised Debt Obligations10 (CDOs), by acting asmiddlemen and charging a fee of around 1.5% to 2% from its clients. When Stanley O'Neal became Co-Head of the Institutional business in March 1997, Merrill Lynch mainly focused on Long-Term Capital Management (LTCM), providing the high powered hedge fund with lucrative financing... |
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Takeover of Merrill Lynch: A Positive Sign for BoA Merrill Lynch's acquisition by BoAfollowing the latter's purchase of troubledmortgage lender Countrywide Financial was expected to be a positive sign for BoA. Purchase of a leading brand with a large retail broker network, gave boost to BoA's investment bank and wealth management franchise. Already being the second-largest bank by assets and the largest retail bank in US, the addition of Merrill Lynch could further consolidate its position. The acquisition also renewed BoA's interests in Latin America where it stopped all its operations long back.
