Bank Of America Obtains Countrywide

arscherer · 01-11-2008, 11:01 AM

http://money.cnn.com/2008/01/11/news...ion=2008011112

NEW YORK (CNNMoney.com) -- Bank of America came to the rescue of embattled mortgage lender Countrywide Financial Corp. Friday, announcing it would buy the company for $4 billion in an all-stock deal.

Countrywide (CFC, Fortune 500) shares tumbled 16 percent in midday trading on the New York Stock Exchange a day after soaring 51 percent on speculation that the deal was forthcoming. Bank of America (BAC, Fortune 500) stock edged lower.

Mark Z · 01-11-2008, 12:27 PM

Thank god Bank of America came to the rescue this would not have been good for consumer confidence, had Countrywide ended up filing bankruptcy. They are one of the largest if not the largest lending institution in America. It looks like things are bad and getting worse in the mortgage world.

arscherer · 01-11-2008, 01:26 PM

Quote:

Originally Posted by mark269

Thank god Bank of America came to the rescue this would not have been good for consumer confidence, had Countrywide ended up filing bankruptcy. They are one of the largest if not the largest lending institution in America. It looks like things are bad and getting worse in the mortgage world.

I agree with that, Mark. There is another thread that is going on with regard to this too...it's pretty busy, and I would definitely check it out!

Saodavi · 01-15-2008, 10:20 AM

Actually, $4B is a pretty cheap price to pay for the nations largest mortgage company. They have tremendous infrastructure and brand awareness. If they can manage to keep the company afloat, I think it will pay handsomely to BofA.

If not, it wasn't *that* much money. :-)

arscherer · 01-15-2008, 10:30 AM

Quote:

Originally Posted by Saodavi

Actually, $4B is a pretty cheap price to pay for the nations largest mortgage company. They have tremendous infrastructure and brand awareness. If they can manage to keep the company afloat, I think it will pay handsomely to BofA.

If not, it wasn't *that* much money. :-)

That is a very good point! And the purchase somewhat works in their favor by allowing BofA to compensate for the taxable income this year.

Saodavi · 01-15-2008, 10:33 AM

Actually, BofA had *already* loaned Countrywide a bunch of money ($1B+ if I recall correctly). They were basically forced to buy Countrywide in order not to lose the money they've already invested.

I'm fairly optimistic that they can pull through .... they'll be pretty bloodied on the other side but they'll probably be alive.

RyanRE · 01-15-2008, 04:03 PM

This is definitely good news. Countrywide filing a BK would be really bad for everybody.

arscherer · 01-15-2008, 07:39 PM

Quote:

Originally Posted by RyanRE

This is definitely good news. Countrywide filing a BK would be really bad for everybody.

It would have been significantly difficult on the market. But, according to "inside officials", the Countrywide name and infrastructure will remain. The only thing that I am worried about is their wholesale department. That is up in the air at this point if they are going to keep that or not since BofA's business plan doesn't contain a wholesale aspect at this point.

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