We still haven’t gotten a very good explanation of what the hell happened at Merrill in Q4 that it somehow lost $15 freakin’ billion. According to the NYT, Bank of America is still trying to figure out how it all went down, and apparently it’s finding some, irregularities in the books.
One trader, who made $120 million in profits in 2008, apparently lost substantial sums on wayward currency bets near the end of the year. The article doesn’t go into details, but something about those trades — not just that they were loss-making — has alarmed BofA execs, perhaps cause they showed up on the books late, or perhaps because they don’t make any sense.
Whatever it is, the bank has sent investigators in trying to piece it all together, and Mr. Stenfors (who remains employed by the bank) is now talking through a laywer.
More generally, Bank of America is questioning the controls (ha!) Merrill had in place, and how it accounted for a wide range of activities.
Bottom line. Bank of America bought a big mess. You know that already, but this just reinforces it.