Bank of America Now #1 U.S. Bank

The completion of the acquisition of Merrill Lynch on Thursday makes Bank of America the largest U.S. bank, nudging JP Morgan Chase and Citigroup out of the top spot with $2.7 trillion in assets.

But with the number-one status comes some big challenges for the banking giant. The purchase of Merrill and its staff of 17,000 brokers cost the bank $50 billion, keeping the investment bank from the fate that met Lehman Brothers in September when it was forced to declare bankruptcy. In 2008 Merrill was ranked fifth in debt and equity underwriting and third in merger advice, according to Thomson Reuters.

The bank will face challenges to rebuild market share, as its shares fell 66 percent in 2008, and it also faces increasing loan losses from Countrywide, which the bank bought in the summer. Budget cuts to save $7 billion per year by 2012 include job cuts of at least 30,000, despite the $25 billion injection of funds from the Treasury's $700 billion Troubled Asset Relief Program.

Merrill's chief executive John Thain will stay on to run the merged company's global banking, securities and wealth management businesses. Before the Merrill purchase, BoA paid $110 billion to buy FleetBoston Financial Corp, credit card issuer MBNA Corp, LaSalle Bank Corp, the U.S. Trust wealth business, and Countrywide.

More Retailers Face Closures in 2009

Massive changes to the U.S. retail landscape are ahead in 2009, say industry experts who predict that many retailers will be driven into bankruptcy and liquidation in the new year. The 2008 holiday sales disaster that hit the majority of retailers is already hitting some strip malls that lost their biggest retailers and haven't been able to replace them.

Retail real estate agents advising the industry say thousands of stores will be forced to close. Hardest hit states will include Nevada, California and Florida. The International Council of Shopping Centers says chain store closings could top 3,100 in the first half of the year.

The consumer spending slump that began in early 2008 has already seen big national chains including Linens n' Things, Steve & Barry's, Whitehall Jewelers, KB Toys and Shoe Pavilion go under. The nation's second largest electronic retailer, Circuit City, filed for bankruptcy protection earlier in 2008, trying to stave off closing.

A high number of retailers that filed Chapter 11 bankruptcy in 2008 have gone into liquidation. Businesses seeking financing while in bankruptcy will find no lifelines from lenders as debtor-in-possession financing will be limited.

Wall Street Looks Ahead to 2009

Wall Street looks to put the worst year since the Great Depression behind it, as stocks rallied on the last day of trading of 2008 on Wednesday. The Dow was up 1.3 percent, and Nasdaq and S & P 500 were also up 1.7 percent and 1.4 percent. Trading was up on Friday in the early morning with an increase of nearly 4 percent on the Dow Jones industrial average.

In the ongoing recession, analysts look optimistically to recovering some ground as the inauguration approaches -- despite a consumer spending slowdown, housing market collapse and the continuing credit crunch still dogging market recovery.

Good news from the auto industry this week also sparked markets, as GMAC Financial Services, the financing subsidiary of GM, received approval to become a bank holding company.

The number of unemployed Americans filing new claims for unemployment benefits dropped last week in the biggest drop in 16 years, but the number of unemployed workers continuing to receive benefits swelled.

About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.

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