Things are getting a tad uncomfortable for Merrill Lynch and its erstwhile CEO John Thain, a man most everyone thought was perfect for the job. We're not talking Bear Stearns hot; more like Lehman Brothers hot. Merrill Lynch is expected to post a large writeoff for the second quarter. A Lehman Brothers analyst has predicted it could be as high as $5.4 billion, due mainly to larger than previously forecast losses because of CDOs and bond insurer-related issues. A large loss certainly is possible, maybe even likely. All this has revived talk of whether Merrill Lynch will be forced to sell off stakes in Bloomberg or BlackRock. CNBC notes that it cannot easily issue more common stock to due capital raising deals struck in December or January.

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