First let’s agree that the acquisition of Merrill Lynch by Bank of America was a horrible move by one or the other. If Merrill doesn’t understand its exposure, then BoA now has an open exposure. Otherwise, why would they go running into the arms of BofA at such a turbulent point? It doesn’t bode particularly well for the industry either, when you have a maniac whacko at the top of BofA.
While President Bush sought to reassure investors that the market would recover, why would anyone believe that he has any understanding of what the market dynamics are at this point? Ben Bernanke clearly has misread the state of the economy from the outset of his stint as the Fed chairman, and he was the President’s best choice. The only person who seems to have made any sense of this at all is Secretary Paulson, who made it clear to Wall Street that the taxpayers cannot be expected to underwrite every company that would otherwise fail. But he has made no claims about understanding when and where the market will turn around. Good for him.
All of this having been said, clearly the president had to say something, and what he said was the least offensive. Had he real credibility he perhaps could have had more of an impact on prices, but that day is long past (if it ever was).