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.