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Merrill Braces for $6B-$8B in New Writedowns

Subprime woes mean unprecedented third consecutive losing quarter for brokerage

By Jim O'Neill,  Newser User

Posted Apr 16, 2008 10:28 AM CDT
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(Newser) – Merrill Lynch is likely to report another $6 billion to $8 billion in writedowns related to the subprime collapse tomorrow, leading to a third consecutive quarterly loss, the Wall Street Journal reports. Merrill’s chronic mortgage losses—$30 billion and counting—show just how deep the world's largest brokerage is mired in the mess, and have it slashing costs and jobs.

Though the subprime market began to crack early in 2006, experts say Merrill continued to create subprime securities into 2007. The company still has $7.5 billion in subprime exposure, well down from its June high of $40.9 billion, and contends that a $12.8 billion round of capital funding has left it solid for the future.

A realtor's sign is seen on the lawn of a foreclosed home in Egg Harbor Township, N.J.
A realtor's sign is seen on the lawn of a foreclosed home in Egg Harbor Township, N.J.   (AP Photo/Mel Evans)
Merrill Lynch CEO John A. Thain is seen in this May 22, 2006 file photo.
Merrill Lynch CEO John A. Thain is seen in this May 22, 2006 file photo.   (AP Photo/Richard Drew, file)
A man checks his PDA outside the headquarters of Merrill Lynch & Co., Wednesday, Nov. 14, 2007, in New York.
A man checks his PDA outside the headquarters of Merrill Lynch & Co., Wednesday, Nov. 14, 2007, in New York.   (AP Photo/Jin Lee)
The corporate logo for Merrill Lynch is shown at an office, in this July 17, 2007 file photo in New York.
The corporate logo for Merrill Lynch is shown at an office, in this July 17, 2007 file photo in New York.   (AP Photo/Mark Lennihan, file)
A man leaves a Merrill Lynch office, Tuesday, July 17, 2007 in New York.
A man leaves a Merrill Lynch office, Tuesday, July 17, 2007 in New York.   (AP Photo/Mark Lennihan)
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