Bank of America has turned its sights on Merrill Lynch, buying it out for close to $50 billion. Bank of America has, indeed, created a reputation for itself as a kind of savior, especially since its earlier acquisition of the embattled mortgage lender - Countrywide Financial Corp. Bank of America now moves from $1.7 trillion in assets to approximately $2.7 trillion. The acquisition has allowed the company to improve its capitalization ratio and receive around $7B in cost-reduction efficiency.
The question is whether or not BoA can absorb the losses that Merrill is seeing due to its riskier CDS and real estate investments.