Merrill Lynch Posts $1.9 Billion Quarterly Loss Because of Housing Market and Credit Crunch
- Apr 17, 2008
New York–Housing crisis and credit market woes caused Merrill Lynch to lose $1.96 billion in the first quarter of 2008, the firm said Thursday.New York-based Merrill also plans to eliminate 10 percent of its workforce–approximately 4,000 jobs, the New York Times said.The firm’s investment banking sector had a net loss of $4 billion and negative revenues of $690 million. In addition, it posted $1.5 billion in collateralized debt obligation-linked writedowns, which involved the most high risk mortgage loans, and $3.1 billion in less risky Alt-A residential mortgage-related writedowns.The company also reported a $3 billion charge because of a failure of guaranties on its bond insurance company-supplied mortgage securities. One of the firms most affected by housing slump and economic slowdown, Merrill has now had $27.4 billion in writedowns for three consecutive quarters and has been forced to obtain more than $12 billion from sources including sovereign wealth funds.Last year, Merrill earned 2.16 billion in profit and $9.6 billion in revenue in the first quarter.