NEW YORK (Reuters) — Bank of America Corp's $50 billion acquisition of Merrill Lynch & Co would mark the end of a storied name in American finance, but create the nation's biggest bank by far.

Investors soured after the merger was announced early yesterday, worried it magnifies Bank on America's exposure to risky debt in a fragile economy, less than three months after the bank acquired mortgage giant Countrywide Financial Corp.

"There is a lot of mistrust out there that the deal will go through at the announced price." This came as Thain, other industry executives and US Federal Reserve officials huddled in emergency meetings in downtown Manhattan over the weekend to mull the fate of Lehman Brothers Holdings Inc, Wall Street's fourth-largest investment bank. Lehman filed for bankruptcy protection Monday.

The shotgun merger was similar to JPMorgan Chase & Co's agreement to buy Bear Stearns Cos in March, except that the Bear purchase went through with financial backing from the Fed. There was no such backing this time, and Lewis said there was "absolutely no pressure" from the Fed to buy Merrill.

"This was the strategic opportunity of a lifetime," Lewis, 61, said at a news conference with Thain in Bank of America's new offices in New York. The bank's headquarters will remain in Charlotte, North Carolina, Lewis said.

Adding Merrill would more than double the size of Bank of America's investment banking unit, and give it the largest retail brokerage and a dominant position in wealth management. It also would get Merrill's 45 percent stake in the asset manager BlackRock Inc.

Bank of America was already the nation's largest retail bank, credit card issuer and mortgage provider.

"This creates the company it would have taken a decade to build," Lewis said.

The disappearance of Merrill would remove the third major New York-based financial services company in less than a year, after Lehman and Bear. A fourth, insurer American International Group Inc, is scrambling for capital because of losses on its mortgage-related debt.

New York Gov. David Paterson said Wall Street might lay off 30,000 workers in a worst-case scenario.

Lewis "paid a full price" for Merrill, said an arbitrageur, who asked not to be named because he wasn't authorized to speak publicly. "The deal also seemed to come as a last-minute idea, even though they said they've talked before. Why now? Why amid chaos?"

Standard & Poor's cut Bank of America's long-term credit rating one notch to "AA-minus." Moody's Investors Service said it may cut its "Aa2" rating, its third highest grade. Fitch Ratings affirmed its "A-plus" rating, its fifth highest.

Thain took over Merrill last December, barely a month after the ouster of his predecessor, Stanley O'Neal. Merrill had a $19.2 billion net loss in the last year, and taken more than $40 billion in write-downs.

"This isn't necessarily the outcome I would have expected when I took this job," Thain, 53, said.

But as Lehman talks proceeded, he said, it became clear that "the funding of independent investment banks was going to come under pressure." Thain said "we haven't had time" to discuss his possible role at Bank of America after a merger.

Just two big Wall Street banks would remain after a merger — Goldman Sachs Group Inc and Morgan Stanley.

Following heavy trading losses, Bank of America's a share for each Merrill share, valuing Merrill about where it had traded just a week earlier. Merrill shares peaked near $99 in January 2007.

The bank is buying about $44 billion of Merrill common shares, as well as $6 billion of options, convertible securities and restricted shares.

The deal requires approval by both banks' shareholders because of the large amount of stock involved.