Wednesday, April 4, 2012

Bank of America Acquires Merrill Lynch: Who Pays?
©2012 INSEAD Case Study
Also available: Teaching Note

This case tells the story of Bank of America, a single cog in the financial machine that survived a major crisis in 2008, though its repercussions continue to be felt in the industry and in the global economy more generally. The mechanics of the financial crisis are examined as well as the part played by Bank of America and Merrill Lynch. While seemingly better positioned than its competitors and able to acquire Merrill Lynch, Bank of America leaders engaged in a number of questionable practices that brought it under ethical and then legal scrutiny.

Pedagogical Objectives: 1. To examine causes of the financial crisis and the role of investment banks, more specifically. 2. To examine the ethical issues associated with the Merrill Lynch acquisition by Bank of America. 3. To explore the culture and compensation systems of investment banks and the scope for increased control over their activities while retaining their legitimate role in risk taking. 4. To explore the regulatory solutions put in place and the scope for banks themselves to curb excessive risk taking.