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Divorce: Bank of America StyleJames Steel COM100 Professor Selnick

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Merrill Lynch: A Wounded Bull

Founded 1914.

Rose to prominence in the

60s and 70s Former CEO Stanley Neal

saddled lynch with CDOs

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What is a CDO?

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A Savior Perhaps?

Arrived 2007 from NYSE.

Assembled finance dream

team Sold billions in toxic assets by

2008.

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The Dream Team.

Peter Kraus- head of strategic

planning, $25 million

Thomas Montag-head of salesand trading, $39.4 million

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Bank of America: a rational giant

Ken Lewis: No Nonsense.

Penny-and-dime banking.

Well positioned for downturn. Minimal toxic assets on

balance sheet.

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Bank of Americas Expansion.

Bought MBNA in 2005.

Bought US Trust in 2006.

Purchased mortgage lenderCountrywide Financial, 2007

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The Countrywide Problem.

Huge losses in 2008, linked to

Countrywide financial

CEO angelo Mozilo fired,walks away with $110 million

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Bank of america to the rescue.

Several Private meetingsbetween Bank of America andMerrill lynch.

In talks with LehmanBrothers as well, possibletakeover.

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The Big Day.

Takeover announced:

September 15, 2008

Approved by shareholders:December 5, 2008

Finalized January 1, 2009

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The Honeymoon Ends.

Analysts discover massive losses in

Merrill Lynch books.

Project massive quarterly loss

John Thain is away on vacation in

Vail, Colorado.

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The Infamous trading desk.

Merrill Lynchs trading desk

responsible for losses.

Sales and Trading desk led byThains appointee Thomas

Montag

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Thains Last Days.

Pushed $4 billion out the door,including a $40 million bonus forhimself.

Was asked to resign: January 22,2009.

Walked away with a goldenparachute of $344 million.

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Once the Dust Cleared

Forced to take $25 billion

TARP payment in December

2008.

Needed second, $20 billion

injection in January 2009.

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The future.

For Bank of America:

Bleak outlook

Mass exodus of top executives

Shaky investment portfolio

Possible Departure of CEOKen Lewis

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For John Thain.

Possible candidate for top job at

Citi

Current Citi CEO Vikram Pandit

under fire by Citi board for lack ofperformance

Thain hired PR firm in a bid to

rebuild his image

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For Global/Investment Banking

Reduction in size of global

firms.

Increase in M&A activity New Banking giant: Enter the

age of Wells Fargo

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In Conclusion.

Ken Lewis made a bad call on ML.

Failure to see ML loses led to Bankof America losses.

Stock price down 76% sincemerger announcement.

Only person who benefited: JohnThain.

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Thank You.

Julio C. Acero

COM100

Professor Selnick