Commentary - 05/07/2008

The Banks' "Hot Potato" Game

Ouch! Ouch! Ouch! Who's got the "hot potato" now? Pass it to the next financial house in line until the music stops. Such a silly game for such important financial institutions to be playing, but play it they do indeed.

For instance, yesterday a Reuter article titled "Merrill Lynch Level 3 assets increase through March was published, disclosing that:

Merrill Lynch & Co. disclosed Tuesday that highest-risk assets on its books rose 69 percent during the quarter ending March 28.

Merrill Lynch had $69.86 billion in so-called "Level 3" assets as of March 28, according to a filing with the Securities and Exchange Commission. Level 3 assets totaled $41.45 billion on Dec. 28.

Of course, as of yesterday, the total Market Cap of Merrill Lynch was $50.58B. Hmmmm.

Then a Bloomberg article titled "UBS Set to Cut 5,500 Jobs After First-Quarter Loss followed which contained:

UBS AG, battered by $17.3 billion of first-quarter losses at its investment-banking unit, plans to cut 5,500 jobs and said clients withdrew a net $12.2 billion from its asset- and wealth-management divisions.

The headcount reductions, which amount to about 7 percent of the workforce, will include as many as 2,600 positions at the securities division, the company said in a statement today. The bank also said it plans to exit the municipal bond business and sell $15 billion in distressed assets to a newly created fund managed by BlackRock Inc. UBS had a net loss of 11.5 billion francs ($10.9 billion) in the first quarter.

However, if you look at the Major Holders of Blackrock below, Merrill Lynch controls over 55% of Blackrock. Then when you go back to an earlier commentary about who controls the largest investment banks, you can see how interconnected the banking system has become. [Go ahead, take the links to further reveal other interconnections.] It seems that since Barclays is able to get just about anything it wants from both the Federal Reserve and the Bank of England, its associates can play this "hot potato" game as long as they want.

Is it any wonder that: Sometimes The Dragon Wins


Symbol Name Of Corporation
BLK

Major
Holders
BlackRock, Inc. (As of 30-Jun-2007) (As of 30-Jun-2006)

Top 10 Institutional HoldersShares2007Value2006
Merrill Lynch & Co., Inc.65,000,25056.11%$10,178,389,147-.--%
PNC Financial Services Group, Inc.43,378,83537.45%$6,792,691,7727.59%
Highfields Capital Management L.P.2,373,5602.05%$371,675,7602.30%
Atticus Capital LP *1,012,700.87%$158,578,6930.95%
Transamerica Investment Management LLC (The Hague, Netherlands)987,790.85%$154,678,0361.16%
Barclays Global Investors UK Holdings Ltd802,548.69%$125,670,991-.--%
Wellington Management Company, LLP716,300.62%$112,165,4171.32%
Kinetics Asset Management Inc.645,570.56%$101,089,806-.--%
Calpers (California-Public Employees Retirement System)593,560.51%$92,945,560-.--%
Putnam Investment Management, LLC555,845.48%$87,039,768-.--%
% of Shares Held by All Insider and 5% Owners:4%7%
Top 10 [5.7%] of 173 Institutional Holders Control100%17.84%
Percentage of Barclays and "Associates" Control94.04%9.22%

Symbol Name Of Corporation
MER

Major
Holders
Merrill Lynch & Co. (As of 31-Dec-2007)
Top 10 Institutional HoldersShares2007Value2006
State Street Corporation76,870,0719.01%$4,126,385,411-.--%
AXA (Paris, France)53,962,2336.32%$2,896,692,667-.--%
Barclays Global Investors UK Holdings Ltd37,962,5634.45%$2,037,830,381-.--%
Vanguard Group, Inc. (The)24,878,2822.92%$1,335,466,177-.--%
Clearbridge Advisors, LLC24,429,6702.86%$1,311,384,685-.--%
Price (T.Rowe) Associates Inc20,093,7512.35%$1,078,632,553-.--%
Marsico Capital Management, LLC16,921,8741.98%$908,366,196-.--%
Morgan Stanley16,520,8771.94%$886,840,677-.--%
Northern Trust Corporation10,620,6991.24%$570,119,122-.--%
Legg Mason Capital Management, Inc.10,586,5461.24%$568,285,789-.--%
% of Shares Held by All Insider and 5% Owners:7%-.--%
Top 10 [1.2%] of 801 Institutional Holders Control34.31%-.--%
Percentage of Barclays and "Associates" Control20.23%-.--%
NOTE: Vanguard manages four funds that control 2.57%.
Therefore, the TOP 10 Major Holders control 36.88% of Merrill-Lynch.

© 2008 by Edward Ulysses Cate
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