Merrill Hid $30.4 Billion In CDO During Crisis
The Financial Crisis Inquiry Commission (FCIC) released its findings as to the causes of the 2008 financial meltdown last week. Among other things, it was discovered that Merrill Lynch hid from analysts and investors that it had $30.4 billion in collateralized debt obligations (CDO), according to a report by Ronald D. Orol with Market Watch.
According to the report, Merrill had reported in July 2007 that it had reduced its exposure to lower rated segments of the mortgage securities market, withholding the fact that the total amount of Merrill’s retained CDO had reached $30.4 billion. Later in October 2007, they announced that Q3 earnings would include a $6.9 billion loss on CDO and $1 billion loss on subprime mortgages, almost double the losses it had warned about only three weeks earlier.
Bank of America (BAC) took over Merrill Lynch with the help of government bailout money at the height of the financial crisis in 2008.