William Cohan’s piece on the last day’s of Merrill Lynch in the Atlantic Monthly provides new kindling for those convinced that Goldman Sachs was orchestrating every step of our financial crisis for its own benefit.
Of course, we all know that there were two former Goldman guys involved in the deal for Bank of America to buy Merrill Lynch: John Thain, the CEO of Merill Lynch, and Hank Paulson, the Treasury Secretary. But it turns out that there was Goldman on the Bank of America side too. Chris Flowers, the private equity investor and a former Goldman banker, was a key adviser to Ken Lewis.
AT the time Lewis struck the deal with Thain, in September, he was plenty sanguine about Merrill’s financial prospects—and boasted about them publicly. In a February 2009 interview with Maria Bartiromo, on CNBC, Lewis said he and his team had seen “everything we needed to see” about Merrill. He pointed out that he had the benefit of the “very, very extensive” analysis done by Bank of America’s financial adviser, J. Christopher Flowers—the billionaire private-equity investor and former Goldman Sachs banker—who had first studied Merrill’s books in December 2007, when he was considering making an investment in the firm, and then again over the weekend the deal was struck. In a press conference on the morning of September 15, Lewis said that Flowers had told him Merrill’s balance sheet was becoming much more stable. “He was very complimentary of what [Thain] and his team had done,” Lewis said, “in many cases not only reducing the marks”—the value placed by Merrill on the securities on its balance sheet—”but getting rid of the assets, which is the best thing to do. So [Merrill had] a much lower risk profile than he’d seen earlier on.”
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.