BofA, Merrill Lynch Merger in Danger of ... Working?

The Bank of America-Merrill Lynch merger initially looked like the Liza Minnelli-David Gest marriage of the financial services world: A hilarious, jaw-dropping odd couple spectacle filled with gossip, intrigue, and lawsuits over strong-arming. Merrill was bleeding up to 11 digits of assets value in December 2008, and BofA CEO Ken Lewis has just resigned after being dogged by shareholders, pension funds and the SEC for months after the crisis merger.

But wait a tick. Now it seems that Merrill is hauling in up to 30 percent of BofA's profits. Is this thing going to work, after all?

Bloomberg reports:

Merrill's businesses contributed $1.8 billion to Bank of America's first-half net profit of $7.5 billion, or 28 percent, even after the bank posted $27 billion in loan charge-offs and higher loan-loss reserves, according to company filings. Those businesses are likely to account for 25 percent to 30 percent of the bank's profits over the next three years

The share of the bank's revenue that came from investment banking and wealth management rose to 47 percent in the first half, after the Merrill acquisition, from 29 percent last year, according to the bank.

Then again, maybe we shouldn't be surprised. Back in June, as the "Fire Lewis" rumors began to gain steam, I chatted with a source from the Merrill camp with intimate knowledge of the merger. He was critical of the way Lewis handled the deal (obviously), but repeatedly stressed that he thought the addition of Merrill's storied wealth management team would prove lucrative to the bank over time. He told me

"I think [Lewis] panicked. He could have said, 'These are bad losses but Merrill wouldn't have needed to be bought if the losses weren't terrible. We still believe going forward that over the next 3, 5, 10 years, this is great deal.' Instead of doing that, he panicked."

Ten years? More like ten months after the fateful December vote (and one week after the Lewis announcement) the Merrill merger is looking less like a schadenfreude spectacle and more like a workable marriage.