Merrill's Debt Deal Not So Cut and Dry

Did it? Nope.

This is what Forbes told us: "The sale price was $6.7 billion. But that wipes away $11 billion of exposure to the toxic investments."

And, as happens when you don't let your foot get caught on the details of a deal, a false conclusion came next, set out happily in the very next line:

"John Thain, Merrill's chief executive officer, appears to be doing everything he can to wipe the slate clean for the company."

Yes, he's wiping the slate clean ... by financing the sale of the bucket of slop and keeping much of the risk.

While Forbes really struck out on behalf of investors, others -- like The New York Times -- at least touched upon the technicalities of the financing but failed to explain what it meant.

The Times dipped its toe on the basic fact of the financing: "Merrill provided 75 percent financing to Lone Star Funds, which means Merrill lent the private equity fund about $5 billion to complete the sale." And that was it. It still referred to the company's "purge" of "tricky mortgage-linked investments" which are even trickier when you appear to sell them but are still absorbing risk.

The Times, though, did not get it, instead concluding that Merrill could go on its merry way now:

"But the sale of the C.D.O.'s, to an investment fund based in Dallas, may enable Merrill to move on, investors said.

"'What they sold, from a headline standpoint, is certainly constructive because they have reduced risk in a very sensitive area,' said Thomas C. Priore, chief executive of Institutional Credit Partners, a $12 billion hedge fund and C.D.O. manager in New York."

Well, yeah, business media, Merrill reduced risk. But not by much.