Maybe Merrill Lynch CEO John Thain just wanted to test his audience. At an investment conference today, Thain said that Merrill would abandon CDO underwriting and other structured-credit businesses, the very ones that led to the subprime meltdown on Wall Street and beyond. And then he took it back.
Merrill has written down $24.5 billion in bad mortgage securities so far, with writedowns for all of the major banks reaching over $100 billion to date. So, it’s no surprise perhaps that investors were pleased at the initial announcement, pushing the stock higher.
Apparently other members of Merrill management weren’t quite as happy, according to a story in the New York Post. Merrill later issued a statement retracting Thain’s earlier statement, which said that the firm is just cutting back on CDOs and will continue to package a “reduced” amount of corporate loans and derivatives.
Click here to read the Post story.