Rumor: BoA to buy Countrywide

[Sapiens]

Well just broke on Bloomberg. No longer rumor.

[Sapiens]

Re: Rumor: BoA to buy Countrywide

http://online.wsj.com/article/SB1199...googlenews_wsj

Bofa In Talks to Buy Countrywide
By DAMIAN PALETTA, VALERIE BAUERLEIN and JAMES R. HAGERTY
January 10, 2008 2:31 p.m.

Bank of America Corp. is in advanced talks to acquire struggling Countrywide Financial Corp., according to people familiar with the situation.

It isn't clear how quickly a deal might be struck, but two people familiar with the matter said it could occur very soon. It also is possible that an agreement could be delayed or fall apart altogether.

The market value of Countrywide has plunged to about $3 billion, which represents about two months' profit for Bank of America. The Charlotte, N.C., bank paid $21 billion cash over the summer for LaSalle Bank of Chicago.

Countrywide's stock has plunged in recent days amid intensifying anxiety among investors over a continuing surge in defaults and foreclosures afflicting the Calabasas, Calif., lender and others in the mortgage industry as home prices fall and the threat of a recession grows.

Bank of America last August propped up Countrywide by buying $2 billion of preferred shares convertible into a stake of about 16% in the lender.

Since then, Countrywide's default problems have continued to grow, sparking speculation that the company could face bankruptcy. Countrywide was forced to deny earlier this week that it planned to file for bankruptcy.

Since buying a stake in Countrywide, Bank of America has been seen as a potential buyer of the troubled lender. The Charlotte, N.C., company has first right of refusal in any sale of Countrywide, and Bank of America has a long history of opportunistic takeovers of banks facing distress.

Bank of America declined to comment, citing a longstanding policy on not commenting on rumors and speculation. Countrywide representatives didn't immediately respond to a request for comment.

Write to Damian Paletta at damian.paletta@dowjones.com, Valerie Bauerlein at valerie.bauerlein@wsj.com and James R. Hagerty at bob.hagerty@wsj.com

[c1ue]

Re: Rumor: BoA to buy Countrywide

Yep, throwing good money after bad.

BofA is relatively healthy compared to its peers, I don't see why they'd want to 'join the pack' other than their historical 'doubling down' tendencies.

Should be fascinating to see if this becomes the one purchase too many...

[GRG55]

Re: Rumor: BoA to buy Countrywide

Yep, throwing good money after bad.

BofA is relatively healthy compared to its peers, I don't see why they'd want to 'join the pack' other than their historical 'doubling down' tendencies.

Should be fascinating to see if this becomes the one purchase too many...

Jim Sinclair had an interesting take on this potential move by BoA. Is there anyone out there familiar with the intricacies of these derivatives that can tell us if this makes any plausible sense for BoA to do?

Posted On: Thursday, January 10, 2008, 4:31:00 PM EST

More Than Meets The Eye

Author: Jim Sinclair

Let us assume one of the largest mortgage entities, Countrywide, who would have certainly been a significant player in the credit derivative market, has a very major credit derivative position with Bank of America. Lets' assume that Countrywide was the entity that had the obligation to perform, but now clearly can't. If Bank of America was to buy the non-performing other side of the many transactions and Countrywide become one entity with Bank of America, as they would, would the transactions between them not evaporate in the merge? It absolutely would. What would you then have to mark down on those specific transactions? I believe NOTHING would have to be marked down any further as two sides of the transaction became one.

That would qualify the already invested $2 billion, plus whatever else needs now to be paid to Countrywide' stockholders. This would more than likely be paid in paper.
It might explain the inexplicable "why" of Bank of America putting $2 billion into Countrywide recently when Mickey Mouse could see that as a sketchy investment at best.

http://www.jsmineset.com/home.asp?RQ...GID=0&linkid=6

[metalman]

Re: Rumor: BoA to buy Countrywide

i like sinclair... have read him for years. he tends to go off on these speculations, tho. circumstantial evidence. it's a fair guess at boa's motives.

[grapejelly]

Re: Rumor: BoA to buy Countrywide

Countrywide can be very profitable...so I can understand BofA making an investment in them.

[olivegreen]

Re: Rumor: BoA to buy Countrywide

sigh... olive green here... the one who went off to try and understand the wild world of economics and finances...

all i've really learned is to be paranoid...

as in all the banks are failing... and i don't know why....

i've also learned that conspiracy theories make more sense than reality...

as in the largest contributor to the re-elect Bush campaign was the bank MBNA which was taken over by B of A...

And BofA must want something for that little favour....

i've also learned the term "privatize profit and socialize debt" which says it all...

i think i'm simply going to have to give up trying to remotely understand anything and start a nice hobby like canning peaches for the apocalypse...

tea and basketweaving...how on earth do all of you stay remotely sane in this "alternate reality" of high finance?

olive

[FRED]

Re: Rumor: BoA to buy Countrywide

sigh... olive green here... the one who went off to try and understand the wild world of economics and finances...

all i've really learned is to be paranoid...

as in all the banks are failing... and i don't know why....

i've also learned that conspiracy theories make more sense than reality...

as in the largest contributor to the re-elect Bush campaign was the bank MBNA which was taken over by B of A...

And BofA must want something for that little favour....

i've also learned the term "privatize profit and socialize debt" which says it all...

i think i'm simply going to have to give up trying to remotely understand anything and start a nice hobby like canning peaches for the apocalypse...

tea and basketweaving...how on earth do all of you stay remotely sane in this "alternate reality" of high finance?

olive

If you find anyone sane around here, let me know.

But physic yet could never reach
The maladies thou me dost teach:
Whom first the cramp of hope does tear;
And then the palsy shakes of fear;
The pestilence of love does heat;
Or hatred’s hidden ulcer eat;
Joy’s cheerful madness does perplex,
Or sorrow’s other madness vex;
Which knowledge forces me to know,
And memory will not forgo.
What but a soul could have the wit
To build me up for sin so fit?
So architects do square and hew
Green trees that in the forest grew.

- Andrew Marvell (1621–1678), British poet

[zoog]

Re: Rumor: BoA to buy Countrywide

If you find anyone sane around here, let me know.

But physic yet could never reach
The maladies thou me dost teach:
Whom first the cramp of hope does tear;
And then the palsy shakes of fear;
The pestilence of love does heat;
Or hatred’s hidden ulcer eat;
Joy’s cheerful madness does perplex,
Or sorrow’s other madness vex;
Which knowledge forces me to know,
And memory will not forgo.
What but a soul could have the wit
To build me up for sin so fit?
So architects do square and hew
Green trees that in the forest grew.

- Andrew Marvell (1621–1678), British poet

"But I don't want to go among mad people," Alice remarked.
"Oh, you can't help that," said the Cat: "We're all mad here. I'm mad. You're mad."
"How do you know I'm mad?" said Alice.
"You must be," said the Cat, "or you wouldn't have come here."

If Bank of America was to buy the non-performing other side of the many transactions and Countrywide become one entity with Bank of America, as they would, would the transactions between them not evaporate in the merge? It absolutely would. What would you then have to mark down on those specific transactions? I believe NOTHING would have to be marked down any further as two sides of the transaction became one.

Sinclair's theory is interesting, and suggests clever Plunge Protection etc. maneuvers. Why have the Fed take previously off-limits garbage, when the affected parties can just merge together and make the derivatives disappear? Like Ouroboros, eating itself.

[Jim Nickerson]

Re: Rumor: BoA to buy Countrywide

sigh... olive green here... the one who went off to try and understand the wild world of economics and finances...

all i've really learned is to be paranoid...

as in all the banks are failing... and i don't know why....

i've also learned that conspiracy theories make more sense than reality...

as in the largest contributor to the re-elect Bush campaign was the bank MBNA which was taken over by B of A...

And BofA must want something for that little favour....

i've also learned the term "privatize profit and socialize debt" which says it all...

i think i'm simply going to have to give up trying to remotely understand anything and start a nice hobby like canning peaches for the apocalypse...

tea and basketweaving...how on earth do all of you stay remotely sane in this "alternate reality" of high finance?

olive

Don't give up, if you do, I believe in time you will regret it. Just keep on trudging along and more things will make sense or cents--hopefully the latter multiplied many times.

[Tulpen]

Re: Rumor: BoA to buy Countrywide

Sorry, but what an idiots at BofA.

First they throw $2B into this company and when they realize they are going to lose it all due to bankruptcy they decide to buy CFC.

[Sapiens]

Bank of America agrees to buy Countrywide for US$4 billion in stock

Bank of America agrees to buy Countrywide for US$4 billion in stock

Bank of America agrees to buy Countrywide for US$4 billion in stock
Ieva Augstums, The Associated Press
January 11, 2008 - 8:11 a.m.
CHARLOTTE, N.C. - Bank of America Corp. said Friday it has agreed to buy Countrywide Financial for US$4 billion in stock, a deal that both rescues the largest U.S. mortgage lender and expands the financial services empire of the country's largest consumer bank.

The acquisition will make Charlotte-based Bank of America the largest mortgage lender and loan servicer.

"Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation's premier lender to consumers," Bank of America chief executive Ken Lewis said in a statement.

The buyout come less than five months after Bank of America plugged US$2 billion into Countrywide Financial Corp. during the height of the summer's global credit crisis, and just weeks after Ken Lewis vowed that making a deal in the mortgage industry would require him "to eat about seven years of my words."

It also places Lewis, an aggressive dealmaker, in the position of a market saviour.

By buying Countrywide, he's keeping the industry and regulators from the messy task of figuring out who would take on the responsibility of collecting payments for the millions of U.S. home loans serviced by the Calabasas, Calif.-based lender.

"There's still plenty of risk involved," said Bart Narter, senior analyst at Celent, a Boston-based financial research and consulting firm. "He's brave to do it. But I think that it's very likely down the road to be profitable, maybe not immediately, but long term."

Shareholders of Countrywide will receive 0.1822 of a share of Bank of America stock in exchange for each share of Countrywide.

The deal is expected to close in the third quarter and to be neutral to Bank of America earnings per share in 2008 and lift earnings per share in 2009, excluding buyout and restructuring costs.

Bank of America expects $670 million in after-tax cost savings in the transaction, or 11 per cent of the expense base of the two companies' mortgage operations.

The agreement has been appproved by both companies' boards and is subject to regulatory and Countrywide's shareholders approval.

Countrywide shares plunged more than 18 per cent, or $1.42, to $6.33 in premarket trading after soaring $2.63, or 51.4 per cent, to close at $7.75 Thursday on reports of a possible deal.

Countrywide was kaput, all they are doing is delaying this fiasco. The real pain is still to come, when all those foreign investors wake up and find their MBS are only valued at less than 1/3 of what they invested. Too bad that agency debt guarantee is only implied...

[olivegreen]

Re: Rumor: BoA to buy Countrywide

Thank you guys. I do want to give up because it is insane out there in your planet... nothing is as it seems and what seems is nothing... if that makes sense.

I'm still so far down on the scale of understanding that I fail to understand if everybody panics and sells sells sells... then who on earth is buying? Smoke, mirrors and mirages...

Thank you though... I don't know if I can keep trying to figure it out. I'm an artist for heavens sakes... what am I doing here? jeez...

most gratefully,
olive

[olivegreen]

Re: Rumor: BoA to buy Countrywide

Speaking as some one who knows nothing... let me hazard a guess...

If you are a bank that owns virtually every house that is foreclosed... well... that's alot of real estate. People have to live somewhere and so they will... and then we have a monopoly bank offering rents or 100 year mortgages and they own people... lots of people and all the land, commercial and private. They will own them all and it will be one bank that owns them all... and that and correct me if I'm wrong, is called a dictatorship... or there is another word...what is it? Owing one's soul to the company store.... the credit card, the mortgage and the people who employ you... all one giant entity called the Bank of America. Or am I off the wall? Maybe you shouldn't answer that... as I'm sure my vivid imagination has gone off on a tangent again... Now who owns Bank of America? Answer me that one. It's a reasonable question even for normal people.

olive

[Tulpen]

Re: Rumor: BoA to buy Countrywide

Now who owns Bank of America? Answer me that one. It's a reasonable question even for normal people.

BofA is owned over 60% by institutional and mutual fund holders.