'Fast Money' Recap: Merrill Deal Haunts BofA

Wall Street closed up again on Friday despite more discouraging news from the banking sector and more layoffs.

The Dow Jones Industrial Average added 68.73, or 0.84%, to 8,281.22, while the S&P 500 rose 6.38, or 0.76%, to 850.12. The Nasdaq climbed 17.49, or 1.16%, to 1,529.33.

Dylan Ratigan, the moderator of CNBC's "Fast Money" TV show, said Merrill Lynch (MER) put Bank of America (BAC) in a big hole in the fourth quarter with $15.3 billion in losses.

That prompted Karen Finerman to wonder whether BofA did enough due diligence before it signed the deal to acquire Merrill. She said Merrill lost a fortune in commercial mortgage backed securities, when it had to write down half the value of those assets during the quarter.

Jeff Macke said BofA made some optimistic assumptions about the sales price for Merrill and Ken Lewis, the bank's CEO, assumed he would get bailed out by the government later.

Finerman vigorously disputed that point, saying she could not believe Lewis would go into the deal thinking the government will bail him out.

Ratigan moved on to the other another big story: the liquidation of Circuit City and loss of 35,000 jobs. He wondered whether this could be a "tipping point" for other destressed retailers.

Macke said it could mark the beginning of "torrent" of failing retailers. Finerman said it could affect traffic at malls where Circuit City(CC) was an anchor. Macke said a similar situation could occur in malls where Sears(SHLD) and Kmart are anchors.