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That Merrill statement in full
Shares in Merrill Lynch were down nine per cent by FT Alphaville home time - struck down by the Journal’s suggestion that the bank might have effectively warehoused mortgage-related losses with hedge funds, piling up potential losses for the future. Here is Merrill’s formal response, in full:
This morning, an article in the Wall Street Journal about Merrill Lynch & Co., Inc., relying on unidentified sources, speculated about inappropriate transactions that “may have been designed” to avoid write-downs that “might have been” required earlier in the year. The story is non-specific and relies on unidentified sources. We have no reason to believe that any such inappropriate transactions occurred. Such transactions would clearly violate Merrill Lynch policy.
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Paul
Interesting end line in an article in today’s Economist on Investment Banks and whether bigger losses may yet be to come ie …”Mr O’Neal fell in a falling market, but perhaps nearer the top than the bottom ”
I have a feeling that will prove to be the case. Talking of falls Merrill’s statement as set out above doesn’t deny it happened it simple says they have no reason to believe inappropriate transactions occurred and such transactions would violate their policy but that is quite different from a categoric statement to the effect that they didn’t happen ie the door seems left open perhaps for a later statemnt to the effect that .. “we have been shocked to discover….”
Cynical perhaps but having ,some years ago read Philip Augar’s excellent book “The Greed Merchants ” about how the merchant banks operate (he was a merchant banker ) I find it difficult to believe anything they say and easy to understand how the current credit crisis could have arisen.