Bank of America and Merrill Lynch

本文主要引用的是08年的金融危机情况下，美林银行遭受巨大的经济危机后来被美国银行合并。因此公司的“太大而不能倒闭”,最重要的原因是金融形势。如果一家公司合并,该公司资产的所有权和责任承担责任。然而,大多数的时间合并后的公司将会有一个糟糕的财务状况,因此需要钱重新启动并开始盈利。
    In 2008 financial crisis, Merrill Lynch faced great loss and was merged by Bank of America in September, 14. Because of this M&A, Bank of America had turned back to Lehman Brothers, which immediately declared bankruptcy the next day. However, this merging was not benefit for Bank of America.
    After the bankruptcy of Lehman Brothers, this merging was thought to be wise, but it was still criticized by some analysts.
    The truth is, Egan-Jones, an independent rating company had issued an announcement to investors, indicating that Bank of America would be the next bank after City Bank that needed the US government fund. Of course, this opinion was strongly objected by Bank of America.
    However, after one year, Bank of America’s profitability is getting worse and worse. S& P had downgraded Bank of America’s rate to degree “A” twice in three months. Therefore, Kenneth Lewis, the CEO of Bank of America, expecting the US government to invest 20 billion dollars to offset the loss of Bank of America when interviewed by British newspaper The Financial Times. He also defined this merging was a “technical failure”.
    So here comes the question: how the firms become “too big to fail”?
    This transaction was very important. Bank of America is the biggest bank and the biggest deposit-taking institution in America, while Merrill Lynch is the third biggest investment bank and the biggest securities broker in America. Someone thought a giant in the global banking industry would be formed by this merging, and Merrill was prevented from becoming the next bankruptcy victim of the global financial crisis, while after this transaction, Bank of America became the largest bank in the USA. 
The negative influence of this merging was obvious. In 2008 financial crisis, many financial companies were facing the danger of bankruptcy. They financial situations were very bad and hoped the cash-rich companies or banks to merge them. However, because of the subprime crisis, the banks also had difficulty getting their loan back because many lenders had gone bankruptcy as well. Bank of America was facing a decline of profit because of the reduction of personal credit business.
    In this time, Bank of America would take great effort, cost lots of money to merge another company which was influential but with tough financial situation, while Bank of America might also face tough financial situations. (So the CEO of Bank of America testified that the US government House Oversight and Government Reform Committee had threated the senior management to merge Merrill Lynch) Therefore, Merrill Lynch was saved, but Bank of America would not be happy for that, for his balance sheet would be awful with the liabilities of Merrill Lynch.
    In 2009, after this merging, the U.S. government funded Bank of America 20 billion to support and after that, Bank of America began to sold its business to all part of the world to raise fund. It seems not a happy ending. For this means that the U.S. government had taken control of the bank industry and Bank of America still had difficulty in funding. 

    For how the firms “too big to fail”, the most important reason is the financial situation. If a firm merged another, this firm will have the ownership of the asset and the responsibility to shoulder the liability. However, most of time the firm which is merged will have a bad financial situation, so it need money to restart and begin to make profit. So the money is important after merging. In this case, Bank of America became “too big to fail” because of the shortage of fund, and it indeed made it hard to operate.

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