Did Merrill Lynch benefit from the Lehman Brothers collapse?
As the timeline for the collapse of Lehman Brothers continues to unfold there is a feeling that Merrill Lynch may well have benefited from insider knowledge that the company was going under. Rumours have been rife for days that Merrill Lynch was struggling to stay afloat and the onset of last ditch talks to avert the collapse of Lehman Brothers seems to have alerted others in the market to act sooner rather than later. So did Merrill Lynch benefit from government advice?
When we suggest insider information this is not to suggest that they benefitted financially from the Lehman Brothers talks just that the attitude of the government became more apparent, i.e. it was not willing to bail out another financial company. With this in mind it is believed that Merrill Lynch was 'advised' to begin talks with cash rich Bank of America in a bid to secure the firm's future.
Quick fire talks began over the weekend with a phone call between the two executive officers and by Monday morning a $50 billion takeover was already signed sealed and delivered. If Merrill Lynch had left it a little later or gone looking to the government for financial assistance it may have been too late to save the group. So at least one plus has come out of the Lehman Brothers debacle.
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