Giant Write-Down Is Seen for Merrill (Lynch) ($15 Billion)

[Roland99]

Source: NY Times

Merrill Lynch is expected to suffer $15 billion in losses stemming from soured mortgage investments, almost double its original estimate, prompting the firm to raise additional capital from an outside investor.

Merrill, the nation’s largest brokerage firm, is expected to disclose the huge write-down when it reports earnings next week, according to people who have been briefed on its plans. The loss far exceeds the $12 billion hit many Wall Street analysts had forecast.

To shore up its deteriorating finances, Merrill is now in discussions with investors in the United States, Asia and the Middle East, including American private equity firms, to raise about $4 billion in the coming days, these people said.

The developments underscore the rising toll that the mortgage crisis is taking on many once-proud Wall Street banks. In recent months Merrill and several other firms have grabbed financial lifelines from wealthy foreign governments. Further investments by so-called sovereign wealth funds could prompt scrutiny by Congress.

Read more: http://www.nytimes.com/2008/01/11/business/11wall.html?ei=5090&en=7ed5049664cce2c4&ex=1357707600&partner=rssuserland&emc=rss&pagewanted=print

[girl gone mad]

1. 4th R + a K. n/t

[Roland99]

2. Thanks. There's also this: AmEx to take $440 million hit in Q4

http://www.marketwatch.com/news/story/after-hours-amex-warning-weighs/story.aspx?guid=%7B17A3AD3C-CD7D-479C-AF21-4684C44DBA80%7D&dist=hplatest

American Express Co. shares lost more than 5% in extended trading Thursday after the credit card giant said it will take a fourth-quarter charge because of slower spending and higher delinquencies last month.

The Nasdaq-100 After Hours Indicator, which tracks the evening action of the tech-heavy index's leading stocks, eased 6 points to 1,948, with American Express perched near the top of the decliners list after its warning.

The charge, $440 million pre-tax, will raise worldwide lending revenue to 100% of past-due loans and increase reserves related to the charge card portfolio, Amex said.

The company also said that it expects to report fourth-quarter delinquencies in its managed U.S. lending portfolio increased to 3.2% from 2.9% in the third quarter, while the write-off rate in the portfolio rose to 4.3% from 3.7%.

[Roland99]

3. And this: Bear Stearns lifts est. of Citigroup's subprime-related writedown to $16B

Bear Stearns lifts est. of Citigroup's subprime-related writedown to $16B
http://www.euro2day.gr/articlesfna/54624916/



WHEEEE!!!!!

[earthside]

4. What It Means

Understand what the words mean in the news report.

"Giant write down" means "giant loss".

"Sovereign wealth fund" means bought by a foreign government. What the story is telling us is that one of the United States' most well known and largest financial institutions is insolvent, broke ... and the the corporation is looking desperately to foreign governments for a bail out.

Merrill Lynch is insolvent.

Really.

Scary stuff.