BofA Faces Big Risks With Countrywide

CEO Lewis confident of his bet on mortgage lender
By Jim O'Neill,  Newser User
Posted Jan 12, 2008 1:18 PM CST
People enter the Bank of America corporate headquarters in Charlotte, N.C. on Friday, Jan. 11, 2008. Bank of America Corp. said Friday it has agreed to buy Countrywide Financial for $4 billion in stock,...   (Associated Press)
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(Newser) – For Bank of America CEO Kenneth Lewis, buying beleaguered mortgage lender Countrywide Financial fits into his retail strategy to offer customers full-service banking and, in the process, sell additional services, reports the New York Times. But, whether BofA can cross-sell Countrywide’s customers aggressively enough to offset potential losses from the damaged lender’s mortgage business is a huge unknown.

“There’s still an awful lot of meat on the bones at Countrywide, and Ken is getting it at a great price,” said Tom Brown, a hedge fund manager. BofA paid $4.1 billion in stock. Countrywide, battling a collapsing housing market and a mountain of subprime loans, could damage BofA. Already, Moody’s has said it might downgrade BofA’s financial strength rating.