Merrill Brings a Lot of Baggage to BofA

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Bank of America ( BAC) Chairman and CEO Ken Lewis is calling the $44 billion acquisition of Merrill Lynch ( MER) the "deal of a lifetime," but the merger of the two powerhouses is not without challenges.

Bank of America and Merrill formally announced the stock-for-stock swap early Monday morning. The deal creates a mammoth organization in which BofA will become the largest brokerage in the world with more than 20,000 advisers and $2.5 trillion in client assets. Merrill's strengths will also bring expertise in global debt underwriting, global equities and global M&A advisory to BofA.

By merging with Merrill Lynch, BofA will be able to grow its business by gaining market share, doing more business with clients and bringing them the best array of products, Lewis said at a joint press conference in New York on Monday along with Merrill's CEO John Thain.

"We've gone through a golden era in banking and financial services in general," Lewis said a little later on. "It's going to be tougher and so there are going to be fewer companies and we're going to have to be better at what we do."

Still, challenges exist for BofA, particularly given the backdrop of a crumbling financial system that it is working against.

Also Monday, Lehman Brothers ( LEH) filed for Chapter 11 bankruptcy after weeks of speculation regarding the brokerage's attempt to find capital. Separately, AIG ( AIG) was rumored to be on the verge of a major restructuring plan.

The acquisition of Merrill Lynch marks BofA's fourth sizeable deal in less than two years. Less than three months ago, the bank completed its purchase of failed mortgage lender Countrywide Financial. Last year it acquired ABN Amro's LaSalle Bank, shortly after completing an acquisition of Charles Schwab's ( SCHW) high-net-worth business through U.S. Trust. BofA did its last transformational deal in 2004, when it paid $47 billion for Fleet Financial.

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