Merrill Lynch Shuts Down Subprime Division

New York–Merrill Lynch & Co., the second-biggest U.S. securities firm by market value, announced Wednesday that it would cease making new home loans through its First Franklin Financial subprime lending unit, Bloomberg reports.The New York-headquartered company will eliminate 650 jobs and record a $60 million charge related to the subprime division, which former Chief Executive Officer Stan O’Neal bought in 2006.Merrill also said it will place its Pittsburgh-based subprime-loan billing and collections Home Loan Services component up for sale.”After evaluating a number of strategies, we believe it is appropriate to discontinue mortgage origination,'” David Sobotka, head of New York-based Merrill’s fixed-income trading department, said.Merrill posted a $7.78 billion loss–the biggest in the firm’s 94-year history–in 2007 due to mortgage and other securities writedowns.