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Merrill Files $15.3 Billion Q4 Loss

Wednesday, 21 Jan 2009 08:28 AM

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NEW YORK - Merrill Lynch & Co. reported a fourth-quarter loss of $15.3 billion in a filing with the Securities and Exchange Commission on Tuesday.

The results were previously released Friday by Bank of America Corp. That day, Bank of America reported its own fourth-quarter loss, and got $20 billion in extra funding from the U.S. government to help it absorb Merrill Lynch, which it agreed to buy last year.

New York-based Merrill Lynch posted a fourth-quarter loss of $15.31 billion, or $9.62 per share, after write-downs totaling $4.2 billion in leveraged loans, commercial real estate assets, and its portfolio of investment securities.

The brokerage also lost $3.2 billion insuring bond defaults, and took goodwill impairments of $2.31 billion. "Goodwill" is an intangible asset that essentially measures the strength and reputation of the brand.

Merrill Lynch said in its investment securities portfolio, it still had $10.4 billion exposure at the end of 2008 to securities backed by subprime mortgages, Alt-A mortgages, commercial mortgages, prime mortgages, and other potentially risky assets.

It also said it had $3.6 billion in other residential mortgage-related exposure, $3.1 billion in other commercial real estate exposure; and $37.5 billion in potential exposure to credit default swaps of asset-backed collateralized debt obligations.

Bank of America shares tumbled $2.08, or 29 percent, to $5.10 on Tuesday, along with other bank stocks. Worries are escalating among investors that the financial industry, still reeling from poor investments in the housing market, will need a larger-scale rescue plan to keep it from failing.

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