Going Down

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Feb 2, 2008 7:42 pm

Some of you may have heard about Merrill reimbursing a municipality over some subprime-related losses. The article said that the city told brokers that they wanted "better than money market rates, liquidity, and AAA-rated." The brokers involved must have really sold those officials a bill of goods to get the account. What amazed me was the rapid drop in value of that particular account. The following is a snippet from the article.

 
"Last summer, when the market for collateralized debt obligations backed by subprime markets seized up, the value of Springfield’s securities plummeted. For example, Mr. Choy and Mr. Kipper invested $12.6 million in April 2007 into the “Centre Square C.D.O.” By August that C.D.O. had a value of 84 percent of its purchase price; by September it was down to 50; in October, 30 percent, and by December, only 5 percent. When the city asked that Merrill sell the securities, Merrill said there were no buyers."
 
http://www.nytimes.com/2008/02/02/business/02legal.html?_r=1&ref=us&oref=slogin
Feb 5, 2008 10:43 am

Like I have stated on here before.

If there is a scandal ML is in the middle of it!
If you are an honest rep why would you tarnish your name and work for ML!
Feb 5, 2008 1:29 pm
Greenbacks:

Like I have stated on here before.

If there is a scandal ML is in the middle of it!
If you are an honest rep why would you tarnish your name and work for ML!
 
Because they're a good firm. Hindsight is 20/20. And even if these reps did do something purposely wrong, with as many reps as Merrill has, taken from the general population, law of averages says that there are bound to be some bad apples. You know, just like there are bad apples in every profession, accounting for example.
 
IMO the large brokerage firms do play a bit fast and loose on some of these things, but we can't pin the subprime meltdown on them. In this case the adminstrators of the school district are as much to blame as Merrills reps.
Feb 5, 2008 1:43 pm

[quote=BondGuy

   
 
IMO the large brokerage firms do play a bit fast and loose on some of these things, but we can't pin the subprime meltdown on them. In this case the adminstrators of the school district are as much to blame as Merrills reps.[/quote]
 
It is not WHO do you pin the meltdown on....but WHAT.
 
GREED
 
The greed of the banks
the greed of the brokers
the greed of the consumers
Feb 5, 2008 8:14 pm

This wasn't intended as a "bash Merrill" story; every firm has warts. However, I do blame the brokers involved. Why else would Merrill pony-up the money to pay them back?