When I first talked about the Goldman Sachs’ (GS) slicing of third-quarter
earnings estimates on CNBC’s Power Lunch last week, the key part, of
course, was that Goldman was including its forecast of a
“multibillion-dollar write-down” tied to mortgages, leveraged loans and
collateralized debt obligations.

But the most intriguing part of that,
as I pointed out, is that Merrill (MER) was not largely regarded as a
major player in CDOs and other mortgage products. I swiftly received an
email from a reader who wrote, “Whoever thought Merrill Lynch had a
small mortgage operation never visited Jacksonville, Florida. The
‘campus’ of Merill Lynch Credit Corporation is huge.”

Maybe,
but that reiterates the point that nobody really knows how deep or wide
this mortgage mess will be — and that it’s hardly over.
Merrill’s stock took a slight hit on the news, then recovered slightly
on rumors that Warren Buffett and others may be taking a stake in Bear
Stearns (BSC) before closing the day off less than 1%.

This much is for
sure: If Buffett doesn’t show up as a buyer of Bear, the financials
will fizzle. And even if he does: The financials are hardly out of the
woods.

Originaly from Source