For many observers of Bank of America, the burning question is still how it manages the integration of Merrill Lynch, which it bought just over a year ago. But Bank of America’s troubles, as evidenced by last week’s announcement of a $1bn loss for the third quarter, are not just to do with Merrill Lynch, which continues to generate strong revenues for the bank. Rather, they have evolved from problems, many of which predate buying Merrill Lynch, on BofA’s own balance sheet and in its risk profile.

A close reading of BofA’s financial statements from the past three years tells the story of how an institution with an impregnable balance sheet in 2006 lost its way in the run-up to the credit crunch, and how, when faced with the opportunity to buy Merrill Lynch’s “thundering herd” of financial advisers, Ken Lewis, BofA’s departing chief executive, could not resist taking on further risk in order to acquire it.