Is Merril Lynch the next Golden West?

I wrote this back in October of 2008 and just wanted to post it since I just started this blog.

Is Merrill Lynch the next Golden West?
I had a discussion with a friend and banker at Wachovia this week. After asking if we were hiring and then sharing the roller coaster of his career and net worth tied to Wachovia’s stock price over the past 10 days, he made a comment that has stuck with me. In a tone of shock and disbelief he stated, “I can’t believe one decision by one person could bring down the 4th largest bank in the country”.
It made me wonder if we are not going through the exact same thing again, “one man, one decision and the largest bank in the country” with BofA. Is Merrill Lynch the next Golden West? Now understand I have no ill feelings at all with Ken Lewis and how he has performed as CEO of BofA. It just seems like there are a couple of similarities between the two transactions. First, both are huge deals, 24 Billion and 50 Billion. Second, both are quick over the weekend announcements. Third, it appears to be another decision made with the lack of board involvement, at least publicly.
The print and news media has flooded us in the past two weeks about the potential impact to Charlotte of losing Wachovia. So now the powers to be are scrambling to minimize the effect of losing the second largest employer in the city. So I must ask are we again ignoring the impact of one man, one decision at the largest bank in the country? Should we not at least be asking what due diligence has and will be done on the Merrill acquisition? What risk is BofA assuming with this deal? Has Merrill’s Trillion Dollar balance sheet been adequately investigated and analyzed in light of our recent $700 Billion bailout of financial institutions? Because let’s face it Charlotte, if BofA is wrong about the value of Merrill’s Assets, we will all be asked to anti up again to bail out an institution “too big to be allowed to fail”. Can Charlotte handle the loss of TWO financial institutions? I hope two years from now “The tale of two Kens” has a different ending.

Art Townsend
Rock Hill, SC
B of A Stockholder