The Wall Street Journal has followed up on our story that J.P. Morgan sought billions in additional collateral from Merrill Lynch last month.
The call to Merrill was made on Sept. 12 by J.P. Morgan Chief Risk Officer Barry Zubrow, these people say. He asked senior Merrill executive Peter Kraus for an additional $5 billion or so in extra collateral, money that would cover J.P. Morgan in the event Merrill went under and was unable to settle the trades cleared through J.P. Morgan.
Merrill never sent the collateral and not long after Mr. Zubrow called, Merrill entered into an agreement to be bought by Bank of America.
We hear that the number actually increased to more than twice that much as Merrill didn’t respond to the request and concern over the firm’s financial health mounted.
CNBC’s Charlie Gasparino, who also reported on this story yesterday (basically at the same time we did), says JP Morgan is considering suing Merrill to recover the billions.
