Friday morning headlines

Big loss for B of A: Junky consumer loans were largely to blame for a fourth-quarter loss of $1.8 billion (the bank made $268 million a year earlier). Meanwhile, Merrill Lynch, which Bank of America hastily purchased last year, lost $15.3 billion in the quarter (Merrill's results were not included in the B of A loss). As has been reported, B of A is getting an extra $20 billion from the feds to cover the Merrill deal. Got all that? From the NYT:

In a conference call Friday morning, analysts asked Kenneth D. Lewis, the bank’s chairman, whether he had regrets that he had agreed to purchase Merrill. Mr. Lewis said that as Merrill’s fourth-quarter losses mounted, he did re-evaluate whether he should close the deal and whether he could renegotiate the price for Merrill. But, he said, regulators implored him to complete the transaction and said they would provide support. “The government was firmly of the view that terminating or delaying the closing of the transaction could lead to significant concerns and could result in significant systemic concerns,” Mr. Lewis said. “We did think we were doing the right thing for the country.”

Citi split: That other banking giant posted an $8.29 billion loss, twice as much as analysts estimated, and said it will split in two. This basically kills off the "financial supermarket" concept that was created more than a decade ago. Citigroup’s lead independent director, Richard Parsons, also said that the bank plans to shake up its board. (Bloomberg)

On board the US Air flight: Passengers included 23 Bank of America employees working on the Merrill Lynch Deal and three Wachovia/Wells Fargo employees. The plane had been headed to Charlotte, where B of A and Wachovia are based. (Clusterstock)

Hope on the credit front?: Yeah, I know it’s shocking, but the numbers are actually looking a bit better, according to NYT columnist Floyd Norris, at least for better qualified borrowers.

There is no doubt that lending standards have tightened, and that some borrowers who could have gotten mortgage loans a year or two ago could not qualify now. Some may have perfectly good credit, but their homes are no longer worth what they owe. Others may fail to meet tougher income requirements, or discover that the cost of mortgage insurance has skyrocketed. Nevertheless, many homeowners are hopeful. The Mortgage Bankers Association reported this week that its refinancing index — the volume of mortgage refinancing applications — reached 7,410. At the end of October, it was at 1,075.

More good news - sort of: Consumer prices were just 0.1 percent higher in 2008, the lowest increase since 1954. The near-zero inflation rate is largely the work of plunging energy prices, which of course are the result of lower demand. (AP)

Er, gas prices are way up: California prices anyway. In the L.A. area, an average gallon of regular was $1.99, according to the Auto Club, which is almost 11 cents higher than last week. Oil prices keep falling, but refiners have sharply cut back on the state's complicated blend of unleaded gasoline in favor of blends with higher profit margins. Nice.

Circuit City to be liquidated: CNBC reports that last-minute efforts to find a buyer have fallen apart. Golden Gate Capital, an SF private equity firm that had emerged as the leading bidder, apparently was unable to come up with the bread.

"Watchmen" dispute settled: The agreement between Warner and Fox paves the way for the film's release on March 6. From the LAT:

Fox and Warner Bros., which will go before the judge this morning and ask for the case to be dismissed, had been battling for nearly a year over which studio controlled distribution rights to "Watchmen." Fox sued Warner Bros. in 2008, alleging that the studio and the movie's producer, Larry Gordon, failed to obtain the rights from Fox, where the project had been in development.

Tribune Co. update: A bankruptcy judge has OK’d the continuation of a short-term financing facility worth $300 million. That allows the company, now in Chapter 11 bankruptcy protection, to keep operating. The financing arrangement, supplied by Barclays Bank and secured by Tribune receivables, will last until April. (Chicago Tribune)

LNG terminal gets shelved: Market conditions have knocked out plans for a liquefied natural gas terminal off the coast of LAX. Not that the project would necessarily have been approved even in a robust economy - environmental groups have been battling this thing for years. (Daily Breeze)