Many investors are applauding Bank of America’s recent purchases, but does anyone really believe that BofA is immune to the subprime massacre?  Is BofA well enough to stand the fate of their US based colleagues?

Sept. 15 (Bloomberg) — Bank of America Corp., the biggest U.S. consumer bank, agreed to acquire Merrill Lynch & Co. for about $50 billion as the credit crisis claimed another of America’s oldest financial companies.

Bank of America will pay $29 a share for New York-based Merrill in stock, 70 percent more than the Sept. 12 closing price, the company said in a statement today. Merrill, battered by $52.2 billion in losses and writedowns from subprime- mortgage-contaminated securities, has plunged more than 80 percent from its peak of $97.53 at the start of last year.

The takeover ends 94 years of independence for Merrill and gives Charlotte, North Carolina-based Bank of America a sales force with 16,690 brokers who manage $1.6 trillion for customers. Merrill, led by Chief Executive Officer John Thain, was in danger of becoming the next subprime casualty after Lehman Brothers Holdings Inc. filed for bankruptcy court protection earlier today.

“If Bank of America can put a fence around the bad assets, that retail distribution is a powerhouse,” said Peter Sorrentino, senior portfolio manager at Huntington Asset Advisors in Cincinnati, which oversees $16.5 billion in assets. “The Merrill Lynch combination makes more sense than a Lehman deal.”

Countrywide Deal

Merrill is the second bargain picked up this year by Bank of America Chief Executive Officer Kenneth Lewis tied to the collapse of the mortgage markets. The bank bought Countrywide Financial Corp. for $2.5 billion in stock last July to become the nation’s biggest home lender. As recently as Sept. 12, Bank of America was considering making a bid for New York-based Lehman.

Bank of America and Merrill said they both have “nominal” exposure to Lehman. Lewis and Thain made the comments on a conference call with analysts and investors.

Bank of America fell $6.03, or 18 percent, to $27.71 at 1:23 p.m. in New York Stock Exchange composite trading. Merrill rose $2.90, or 17 percent, to $19.95.