From the S&A Digest:
***In late 2007, after losing almost $10 billion, Merrill Lynch paid its employees bonuses totaling $14 billion. Said its CEO John Thain: "I want to reiterate how strong most of the businesses have done this year, and we are very optimistic as we look out to 2008." Just a few weeks later, Merrill announced additional losses, totaling $16 billion. The combined writeoff for losses taken on investments made between 2004 and 2008 equaled more money than Merrill Lynch had ever earned – in total.
On top of all these losses in 2007 and 2008 and after telling investors half a dozen times that it sold all of its toxic assets, today... incredibly... Merrill announced yet another enormous loss – $15 billion – an amount beyond what Bank of America could afford after acquiring the company for $50 billion.
The Merrill deal should cost Bank of America CEO Ken Lewis his job. But you have to wonder what Merrill told Ken Lewis and Bank of America's board about its finances. The company repeatedly lied to the public about the quality of its assets and the size of its losses since at least the beginning of 2007. And that begs a larger and more important question...
***At the end of 2007, the five largest U.S. securities firms paid their employees $66 billion in bonuses. All of it came from "profits" that we've since learned were horrendous losses. With the writeoffs from just these five firms now totaling much more than $100 billion, at what point do you begin to judge what these people did as not merely reckless and negligent, but calculating and criminal? They had to have known by at least the end of 2007 that most of their mortgage securities were cooked. And yet, they took the biggest bonuses in the history of Wall Street, leaving taxpayers to pick up the mess.
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