Bank of America's Chief Executive Supposes Merrill Lynch Aid To Be 'Tactical Mistake'

Bank of America's (BoA) decision to ask for $20 billion in public funding from the US Treasury to prop up its takeover of Wall Street brokerage Merrill Lynch was a "tactical mistake" that made the company appear as weak as

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Bank of America’s (BoA) decision to ask for $20 billion in public funding from the US Treasury to prop up its takeover of Wall Street brokerage Merrill Lynch was a “tactical mistake” that made the company appear as weak as the stricken Citigroup.

In an interview with the Financial Times, BoA chief executive Ken Lewis said an “abundance of caution” had persuaded him to ask for the money after Merrill posted a worse-than-expected fourth quarter loss of $15 billion.

BoA had already received $25 billion in September under the US government’s financial bailout.

It moved for Merrill Lynch that same month when the brokerage was teetering on the brink of collapse following the turmoil triggered by the demise of Lehman Brothers.

The New York Times described the deal as the bank’s “largest and boldest move” that ultimately proved to be “a deal too far”.

“In hindsight, it was a tactical mistake because it put us in the same category as Citigroup,” says Lewis.

BoA shares have lost 76% of their value since the acquisition of Merrill Lynch officially closed on January 1st, the Financial Times noted.

D.C.

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