The shotgun deal, valued at $50 billion when it was announced in September, will create the nation's largest financial services company. But it comes at the cost of independence for one of Wall Street's greatest institutions and is yet another sign that the era of big investment banks ruling the financial universe is over.
"The I-bank model is gone," Keefe, Bruyette & Woods analyst Jefferson Harralson said. "This vote is a visible piece of the changing world."
The deal, struck as the solvency of investment banks was in grave doubt, has kept Merrill from a complete meltdown like the one suffered by Lehman Brothers Holdings Inc., which was forced to file for bankruptcy. It also prevented the company from being sold at fire-sale prices, as Bear Stearns Cos. was last March.
The acquisition enables Bank of America to expand the financial services it offers its already huge customer base, and gives Merrill the protection and limits on risk that it needs to survive. Shortly after the Bank of America-Merrill deal was announced, the two remaining big independent investment banks, Goldman Sachs Group Inc. and Morgan Stanley, applied to become bank holding companies by themselves — the credit crisis effectively doomed the stand-alone investment bank model.