Is BofA assistance to cover Merrill's bonuses?
Bank of America was hailed as the saviour of the universe, or at least that little bit of it that is Merrill Lynch when it agreed to buy out the bull last year. But deep down in the creatures bowels, something nasty was stirring. And now the question is, who's going to muck out the bull ring after B of A had to ask the US Government to allow it emergency funding because Merrill's figures were, er,... well, you get the picture.
In fact, the defecation is well and truly flying as the Financial Times has uncovered what it claims is evidence of seriously dodgy dealings.
Remember the call from New York to London to send thousands of millions of pounds back just days before New York paid out bonuses and then pulled the plug?
Something not too unlike that appears to have happened at Merrill
According to the FT, Merrill paid its bonuses "just three days before the closing of the sale to B of A." That, on the 29th December last year, the paper alleges, was a month early. But Merrill was in deep trouble, bleeding cash and no sign of significant income on the horizon. B of A was, basically, underwriting it. But despite the escalating losses, Merrill paid out some USD15 milliard in a variety of compensation packages.
But then B of A found that Merrill's losses were worse than expected. And by the third week in January it was begging for state aid. How much? USD20 milliard.
How much of the USD15 milliard was actually bonuses is currently a matter of speculation.
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