As Bank of America Corp. (BAC) prepares for a pending acquisition of Merrill Lynch & Co. (MER) later this year, news is leaking out that the job cuts involved with swallowing the operations of the world’s largest retail brokerage and an additional heaping serving of bad mortgages could be far worse than the company originally suggested when the merger was first announced. CNBC’s Charlie Gasparino, who probably should be earning the nickname “wall fly” given the volume of private board room discussions he’s been privy to this year, reported Tuesday that the North Carolina-based bank could be readying as many as 30,000 jobs for the scrap heap as part of the merger of the two financial giants. “There will be a lot of layoffs,” Gasparino reported on Tuesday afternoon. “Something like 30,000 layoffs over a period of time. It could be through attrition and through the selling of businesses. But that workforce will come down dramatically.” That figure is well above the 10,000 jobs most had been tossing around — and 10,000 jobs lost by itself, with cuts expected to start before this year is out, is large enough. The 30,000 figure comes from unnamed sources that spoke with CNBC, and an assessment of BofA CEO Ken Lewis’ own stated $7 billion savings target. He said when the merger was announced that he would look to trim combined operating costs by roughly 10 percent through 2012. The combined company would have roughly 300,000 jobs, meaning the cuts would amount to 10 percent of the new BofA’s workforce. BofA also absorbed the lending and servicing operations of Countrywide Financial, the nation’s largest mortgage banker, earlier this year — talk about loading up on mortgages right as mortgage are tanking. Mortgages are a problem, as is the investment banking business ill-sized for a longer-than-usual recession that’s coming along with the Merrill acquisition; problematic, as well, is exposure to a souring consumer credit portfolio. The bank will need all the capital it can get — and may have to dilute shareholders to get it. Analysts now suggest that maintaining current dividend levels isn’t likely, either. For his part, Lewis wouldn’t comment on the speculative size of coming layoffs at BofA during an event Wednesday, saying only that the bank is in the “final stage of our analysis” for planned headcount reductions, according to a Reuters report. But he did say that “times are really tough, and we don’t see any short-term rays of sunshine,” suggesting that business leaders hoard cash and capital for the next six months, as reported by the Charlotte Business Journal. We can’t help but wonder if BofA won’t be forced to do the same, despite pressure from federal officials to begin lending more aggressively. Keith Horowitz, an analyst at Citigroup, isn’t waiting for those final headcount numbers — he slashed his fourth-quarter and 2009 earnings estimates on Tuesday, according to a separate Reuters report. Horowitz predicated that mark-to-market losses and a huge reserve build will drag on the bottom line to the tune of $4.2 billion, when the bank reports its earning results on January 20. He also reduced his target share price by 42 percent to $22, and said he now expects BofA to earn just 2 cents per share in Q4 — down dramatically from his prior estimate of 42 cents per share. All of which means Horowitz found a new religion pretty quickly once he looked at what BofA has saddled itself with. Critics have said for months now that BofA’s decision to loan up on mortgages at the precise time mortgages have become a problematic asset class could prove to be a bet Lewis will regret — and the trickle of analysis out there now suggests that the North Carolina-based bank may have at least some sort of pangs to deal with, starting this quarter. A statement from BofA officials released on Tuesday said the firm was “evaluating our staffing levels, given both the pending merger with Merrill Lynch and the weak economic environment, which is affecting the level of business activity. While we believe both factors will result in eliminations of positions, we have not completed our analysis. We expect to have a final plan early in 2009.” Until then, it’s likely the speculation will continue; but should the large layoff estimates prove true, look for investor confidence in the banking sector to crater all over again. Shares in BAC closed Wednesday at $15.05, up 7.12 percent. Write to Paul Jackson at paul.jackson@housingwire.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.