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Merrill Lynch CEO says Bear Stearns bailout saved global financial system

Merrill Lynch & Co chief executive officer John Thain said the US Federal Reserve’s rescue of Bear Stearns Cos helped avert “systemic risk” to the global financial system posed by the credit market meltdown.

The move “has given the market a great degree of confidence that nothing is going to be systemically damaging,” Thain said, speaking to reporters in Tokyo yesterday.

Bear Stearns, the fifth-largest US investment bank, became the most prominent victim of the global credit squeeze last month when JPMorgan Chase & Co agreed to take it over with the Fed’s backing. Fed Chairman Ben Bernanke said last week that a failure of Bear Stearns could have led to a “chaotic unwinding” of investments throughout the US economy.

Thain repeated that Merrill didn’t need to raise additional capital. He said he’s “bullish” on Merrill’s prospects in Japan and said he plans to expand in wealth management in the world’s second-largest economy.

He declined to comment on possible alliances with Tokyo-based Mizuho, which said in January it would invest US$1.2 billion in Merrill Lynch.
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