Did Fed grease the wheels of Merrill deal?

Why did BoA pay so much for Merrill Lynch? Many think they vastly overpaid given the dire situation going on around the brokerages. Did the Fed secretly sweeten the pot?

Look at the "evidence": Lehman is falling, and the Fed makes the point that it won't intervene. That tells the market to be careful and not expect bailouts. At the same time, it puts the financial markets in turmoil. Something is needed to prevent a total meltdown. How about a Merrill deal, to make it look like some solutions will be found?

Maybe Bank of America—one of the few strong enough to absorb such a deal—doesn't want to take on more risk after Countrywide and all their other acquisitions. But a deal has to be made before the markets open! So the Fed steps in and guarantees part of the deal. Of course, it doesn't say so—that would be more intervention, and would undercut the hard line they are taking with Lehman!

So the deal is made secretly. BoA won't tell, as they're getting a good deal. Merrill won't tell, cuz they'll never get a price this high otherwise. The Fed won't tell. Nobody will tell...but *I* will tell you!

...of course, I don't know that this is true, but it just seems to be that the timing of the Merrill deal—like so many of the Fed's timings since Bernanke took over—is a little suspicious.