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BofA May Buy Ailing Countrywide

Posted Jan 10, 08 3:21 PM CST in Business,  US 

(Newser) – Bank of America is in advanced talks to buy troubled Countrywide, the Wall Street Journal reports. The Charlotte-based bank could be on the brink of acquiring the US' largest mortgage lender, whose market value has plummeted to $3 billion—about 2 months' profit for BofA—as foreclosures continue to dent profits. It's still unclear if the Federal Reserve would approve of an even-more-giant BofA, the second largest bank in the nation.

Bank of America holds a 16% stake in Countrywide after buying $2 billion in preferred shares this summer—and earning right of first refusal in a sale. But the deal could give BofA more than the 10% of US deposits allowed to one institution under federal law. Countrywide shares rose 74% today on the publication of the Journal story, Bloomberg reports.
Source: Wall Street Journal

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Ian Stewart, right, and Gregory Gravalis, both of Bear Wagner Specialists, monitor trading on the floor of the New York Stock Exchange, Thursday, Jan. 10, 2008. Wall Street rose in volatile trading on...   (Associated Press)
Vanessa Brocco, left, talks to Richard Zboray, of Lehman Brothers Market Makers, at his post on the floor of the New York Stock Exchange, Thursday, Jan. 10, 2008. Wall Street rose in volatile trading...   (Associated Press)
Angelo Mozilo, Chairman and CEO, Countrywide Financial Corp. speaks during a panel discussion on the subprime market fallout Monday, Oct. 29, 2007, in Beverly Hills, Calif. (AP Photo/Ric Francis)   (Associated Press)
An employee of Countrywide walks into the Northridge branch in Los Angeles, Calif., in this Aug. 22, 2007 file photo. Countrywide Financial Corp.'s shares tumbled for the second day Wednesday, Jan. 9,...   (Associated Press)
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