Another hint of the severity of the sub-prime credit problems.

Merrill Lynch has appointed a replacement for CEO Stanley O'Neal, who resigned in October when Merril announced a third quarter write-down of $8.4 billion that resulted in a $2.3 billion loss. for Merrill Lynch. The replacement CEO, John Thain, was a surprise, since it was widely known that Merrill Lynch was talking to BlackRock CEO Larry Fink. According to CNBC:

CNBC has learned that Fink said he would take the job but only if Merrill did a full accounting of its subprime exposure. At that point, Merrill, which owns 49% of BlackRock, moved in a different direction and decided to go with Thain instead.

That suggests to me that Merrill Lynch knows that there are a lot more bombs in the Sub-prime investments, and they don't want those bombs to surface until everyone else in the market is having similar problems, or until they can slowly work their way out of those bad loans without anyone making a big issue of it.

At this point, I am speculating. If Merrill is out there on their own, the government will not bail them out, but if everyone is having the same problem at the same time, the government can be expected to be forced to act to protect the overall financial markets and the economy.