Tonight, the New York Times put it best.
“In one of the most dramatic days in Wall Street’s history, Merrill Lynch agreed to sell itself to Bank of America for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, hurtled toward liquidation after it failed to find a buyer.”
Maybe this time, the news media will pay attention to one of the most important stories of this new century: The reshaping of America’s financial landscape. Or as the New York Times article so aptly put it-
“Once-proud financial institutions have been brought to their knees as a result of hundreds of billions of dollars in losses because of bad mortgage finance and real estate investments.”
I have doubts about the mainstream media paying long term attention to this growing mess. Many reporters, editors, producers, newsroom folks, etc., have a hard time grasping the detail of business reporting. They often can’t juggle the numbers that come with it. Most of them are smart too. But they just don’t have a foundation for understanding business.
Conversely, some of the most intelligent reporters I’ve met have been business reporters. They are detail oriented. They have a knack for nuance. They understand the impact of financial news, even if their editors at times may not.
The U.S. housing/mortgage market is in a deep slump. America’s in a recession. Our inflation rate is rising. Americans need guidance from news organizations whose business and economic reporting they can trust. News organizations that aren’t serving that demand in times like these aren’t performing good journalism. (Click on Bank of America, investors, still paying for Merrill Lynch sale to see the updated 2013 story about Bank of America and Merrill Lynch.)
“But even as the fates of Lehman and Merrill hung in the balance Sunday night, another crisis loomed as the insurance giant American International Group appeared to teeter. A.I.G. sought a $40 billion lifeline from the Federal Reserve, without which the company may have only days to survive.”
I hope the U.S. government will not risk billions of U.S. tax dollars to help save another private company. It’s not worth the risk. Not to the U.S. economy. Not to U.S. citizens who may see the value of the dollar diminish further if the federal government has to absorb the loss of potentially hundreds of billions of dollars in loan guarantees it has already made to Fannie Mae, Freddie Mac and Bear Sterns.
Who bails out individual investors if they make bad investments? Unless you have a benevolent, wealthy relative, you absorb the loss yourself. It should be that way too for U.S. companies when they make bad financial decisions and investments.
Under the latest deal the New York Times reported that Merrill’s so-called “thundering herd” of 17,000 brokers will be combined with Bank of America’s smaller group of wealth advisers and called Merrill Lynch Wealth Management.
After this latest announcement, Merrill Lynch’s new Wealth Management title could be the biggest stretch of the decade.