Merrill Lynch Mulit-Billion Dollar Subprime Mortgage Write-off Biggest Hit Yet

Yesterday Merrill Lynch announced it’s first quarterly loss in 6 years with the excuse their subprime mortgage exposure cost them $7.9 Billion, $3 Billion more than expected - marking Merrill’s gut-punch as the “Worst Hit” taken by a financial company from the subprime mortgage meltdown.

We saw the $3 Billion hit Bear Stearns took at the beginning of the summer which threw everyone from Jim Cramer to Ben Bernanke into a tisy…and we have the video to prove it.

The Fed went on a rate cutting spree that is yet to see its end…more to come now that we know of Merrill’s idiocy.

Unlike Bear, Merrill Lynch was the leader in subprime mortgage backed CDO / CMO underwriting..and holds over $39 Billion. It’s this holding they “wrote down” almost $8 Billion worth…leaving the worrisome question:

Is That All?

My guess: Hardly

With an extra $30 Billion or so left still to go bad…cleaning out this stinky subprime storage locker has only just begun.

E. Stanley O’Neil, CEO of Merrill Lynch had better don a yellow haz-mat suit and clean house or stockholders will ask the board to clean him out.

Hell, at this point…what stockholders…who am I kidding?

If you own this stock, you live in a cave and are in need a shower yourself!

Oh, well, a great short opportunity…if you saw it coming since Merrill stock plummeted 5.8% yesterday and another 3.8% so far today…

It will get worse…so maybe the short opportunity has only just begun as well…your call on that one.

Good Luck!

UPDATE 11-10-2007: Old O’Neil got sacked only 4 days after I predicted it in this post…

Author: Rob K. Blake
Published November 10, 2007
Modified March 20, 2008

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