FED forces take over of Countrywide by BOA

[fencerider2]

The FED is behind the deal because they were on the verge of BK.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aCbUSVliDIKQ&refer=home

Jan. 11 (Bloomberg) -- Bank of America Corp., the biggest U.S. bank by market value, agreed to buy Countrywide Financial Corp. for about $4 billion, five months after making a money- losing $2 billion investment in the unprofitable mortgage lender.

Bank of America will acquire Countrywide for approximately $7.16 a share in stock, the Charlotte, North Carolina-based company said in a statement today. The offer is 7.6 percent below Countrywide's closing share price on the New York Stock Exchange.

[Serbonze]

Please explain how the Fed forced BoA to purchase Countrywide?

You don't think this was in the works from the first cash infusion?

[Joe]

Please explain how the Fed forced BoA to purchase Countrywide?

You don't think this was in the works from the first cash infusion?

Agreed. Many said this was the whole reason they did it in the first place.

I knew of 3 retail brokers that worked for BOA that said they were being "let go" 2 months ago... sounds like BOA had planned on not needing their own "retail" brokers anymore...

[nipster]

I think this is a mistake, wtf does BOA want with all these delinquent borrowers and shady loans CW has?

I have to imagine some sort of government bailout is in the works

[MianoSM]

At the end of 2007, more than 7 percent of payments in the company's $1.5 trillion servicing portfolio were more than 60 days overdue.

Not working with an 800 there....

I think BoA did this on their own, and BoA has already declared that they are going to scale back all the risk they can and aren't going to make any sub prime loans.

Seems like BoA just buttered them up for the kill and is going to try and expand its own worth with an established company. Banks are already in the real estate business, this just puts CFC and BoA in a tighter relationship (like a dough factory buying a bread brand). :dunno:

[TampaDude]

My landlord works for Countrywide...I wonder if he's going to remain employed after this...I hope so.

[BAMF]

The Fed? Thats horseshit. BoA took over Countrywide because CFC dropped far enough below I think it was 15 dollars that they had to issue so much stock to BoA to make up (as stipulated in the loan) the difference that they lost control of their own company.

It was a corporate takeover. How the fuck is the Fed behind this?

[Brian]

Going to be interesting to see the outcome, I have a few friends that have been with the company for some time now. Not to long ago they started walking people out in groups.

[TampaDude]

Going to be interesting to see the outcome, I have a few friends that have been with the company for some time now. Not too long ago they started walking people out in groups.

What do you mean by "not too long ago"? Today?

[Young,Fablous,&Broke]

Watch closely to see how BOA uses CFC's loses to get a billion dollar tax deduction.

[MianoSM]

Watch closely to see how BOA uses CFC's loses to get a billion dollar tax deduction.

You'd think they'd have tried to get that done before the calendar year was over, I know commercial taxes are collected later then personal, but aren't they still done by calendar year from the federal side?

Somewhat odd to donate your car in January for a tax deduction a year later...

[Serbonze]

Let's just work a scenario here. Only what was that quote...7% of Countrywide loans are in default? So BoA just purchased 93% of the nationst second largest mortgage company for a 75% discount.

Let's push this a little further. BoA purchases Countrywide, and absorbs the mortgage business into their current processing centers. Say you increase FTE by 25% percent to cover the additional accounts. That means you can reduce the current Countrywide headcount by 75%.

BoA doesn't have much of an insurance division, so they sell off off that part of Countrywide to the highest bidder. They do the same with the banking part of the business as the mortgage side, they absorb it into their current centers and lay off most of the workers. So BoA just increased their yearly revenue by how much while dumping off most of the FTE of Countrywide while reaping millions and millions of dollars in tax breaks.

Just a thought of course....

[fencerider2]

Nuff said.


http://seekingalpha.com/article/59802-the-real-story-on-countrywide-fed-behind-the-deal?source=patrick.net



The Real Story on Countrywide: Fed Behind the Deal?

1. The Fed is behind the deal.
2. The Fed is behind the deal because the rumors yesterday of a near bankruptcy were probably true.
3. As part of the deal, the government likely agrees to guarantee BofA against Countrywide-related losses.
4. Lost in the in the noise yesterday was that Moody’s downgraded the ratings on 30 (count ‘em — THIRTY!) tranches of Countrywide’s mortgage debt by more than a few notches. They did something similar before American Home Mortgage filed for bankruptcy.
5. Investors bid the stock higher assuming a premium when it’s likely that BofA still needs to fully assess the value of the assets before the deal’s full value will be known.
6. Big question, of course, is what Countrywide investors will get.
7. Rule of thumb with bankruptcies: Stocks often double on their way to zero.
8. BofA gets a free bank and a put to the government.

[Brian]

What do you mean by "not too long ago"? Today?


Maybe 2 months ago? I don't remember the exact date.