Bank of America Bails Out Countrywide

Lender avoids disaster as bank buys $2 billion in cut-rate shares
By Jason Farago,  Newser Staff
Posted Aug 23, 2007 6:34 AM CDT
A Countrywide Banking and Home Loans office is seen in Los Angeles Friday, Aug. 10, 2007. While most of the mortgage market worries so far have focused on the huge losses flowing from the subprime home...   (Associated Press)
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(Newser) – Countrywide came back from the brink yesterday as Bank of America bought $2 billion in preferred stock in the mortgage company, writes the Los Angeles Times. Countrywide's share price soared in after-hours trading, only a week after the credit crunch brought it to the point of bankruptcy.

BofA's purchase is no charitable handout, though: it gives the bank a sizable chunk—as much as one-sixth—of the nation's largest mortgage lender at a cut-rate price. BofA has long been interested in expanding its presence in the mortgage field and, as one analyst noted, "once the dust settles, the survivors will have much less competition . . . It looks like BofA got a very nice deal."