Why does Merrill need the money?

Bloomberg reports today that Merrill Lynch raised $9.55 billion by selling bonds and preferred shares after writing down the value of $6.5 billion of assets. That's great news for Merryl but Dick Bove, analyst at Punk Ziegel, is not so sure. He contends that CEO John Thain for weeks denied any need of his firm to raise new money. In addition Bove thinks that the company overstated earnings by 2.1 billion dollars due to accounting tricks. Accounting rule 159 led to a write up of Merrill's own debt by 2.1 billion dollars. Bove says its all legal but the company will have to fork over the money in the end when the loans mature. We have refereed to this in a recent post: Are banks unrealized losses 'stashed away' in peculiar accounting?

click for video




video: Dick Bove on banks
http://www.bloomberg.com/avp/avp.asxx?clip=mms://media2.bloomberg.com/cache/vYOaUTAHu1F0.asf

source: Merrill Raises $9.55 Billion in Sales of Debt, Preferred Shares
Bloomberg
http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=MER:US&sid=axqDCKqLjbzA

read also: Are banks unrealized losses 'stashed away' in peculiar accounting?
http://manonthestreet64.blogspot.com/2008/04/stashed-away.html