Merrill Lynch's Subprime Problems to Continue
Merrill Lynch, which has already written down approximately $24.5 billion on its subprime securities investments, is anticipated to write down additional investments in the first quarter of 2008. Noted stock research firm, Sanford C. Bernstein & Co., estimates that Merrill Lynch will write down an additional $4.5 billion on collateralized debt obligations (“CDOs”). Merrill Lynch reported that it held approximately $30.4 billion in CDOs at the end of 2007 and the values of CDOs have fallen sharply since that time.
Bernstein analyst, Brad Hintz, believes that Merrill’s problems associated with subprime securities and other related derivative instruments will continue to impact the firm for the foreseeable future. Hintz said “It will take at least several years for Merrill to fully divest itself of these troubled assets.”
Merrill’s future results are also likely to be impacted by the avalanche of legal claims that the firm is expected to encounter as a result of the subprime crisis. Various claims brought by shareholders and unhappy investors in subprime investments are expected to impact the firm for several years. Other subprime claims relating to the validity of bond insurance could also have an impact.
Page Perry, LLC is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in representing individual and institutional investors regarding their subprime problems. For further information, please contact us.
