Fed Approves $4B Countrywide Deal

Bank Of America Will Buy Distressed Subprime Mortgage Lender

(AP)  The Federal Reserve on Thursday approved Bank of America Corp.'s purchase of distressed subprime mortgage lender Countrywide Financial Corp.

In a statement, the federal regulatory said it considered many comments for and against the company buyout and "has considered carefully the financial factors of the proposal."

Charlotte-based Bank of America, which announced its $4 billion acquisition of the Calabasas, Calif.-based mortgage lender in January, has faced much criticism for Countrywide's large exposure to subprime home loans that were offered to borrowers despite their shaky credit.

Countrywide lost about $1.6 billion in the last six months of 2007, and the company faces numerous investigations and lawsuits related to its lending practices.

Bank of America has said it will tighten those lending standards.

"This transaction represents a rare opportunity for Bank of America to significantly gain market share in the mortgage business, allowing it to expand in a cornerstone financial product," Bank of America Chairman and Chief Executive Officer Ken Lewis said in a statement commenting on the Fed decision.

In its order, the Fed board said that after the proposed deal Bank of America would remain the largest depository institution in the country, controlling approximately $773.4 billion in deposits, which represent 10.9 percent of total insured bank deposits in the country.

When the deal was first announced, Bank of America said it would pay about $4 billion in an all-stock deal for Countrywide, exchanging 0.1822 shares of Bank of America for each share of Countrywide outstanding.

In recent months, some analysts have speculated that the deal may be completed at a lower price because of further deterioration in the mortgage market and a continued rise in mortgage delinquencies and defaults.

Experts have said that the deterioration of the mortgage market and Countrywide's loan portfolio could lead to costly write-downs and create a drag on Bank of America's earnings.

But on Monday, Lewis told analysts on a conference call that he believed buying Countrywide was still a good deal even though the housing market had continued to falter since the deal was announced.

Lewis said he believed that housing conditions would improve by early next year. He said that Countrywide and its professional sales force would give the bank a boost as it pushes to increase market share in the mortgage sector.

Bank of America said it expects the sale to close in the July-September quarter.

The Fed board approved the deal in a 32-page order issued Thursday. Countrywide had said previously that it will hold a special meeting of shareholders on June 25 to approve the proposed sale.

[wardoglrs]

Anything to do with the Federal Reserve is a lie, These are the banks that the forefarthers warned us about. I predict futur happiness for Americans if they can prevent the goverment from wasting the labors of the people under the pretense of taking care of them. Thomas Jefferson.

%u201CThe danger is not that a particular class is unfit to govern. Every class is unfit to govern%u201D
Lord Acton.

%u201COne of the penalties for refusing to participate in politics is that you end up being governed by your inferiors.%u201D Plato

%u201CUnfortunately, nothing will preserve [liberty] but downright force. Whenever you give up that force, you are inevitably ruined.%u201D Patrick Henry

[forthepeopl1]

houses are down well over 75 percent from a year ago, a house was baught in our town last week was 2 years old, paid 2 years ago 575,000 for a 4 bedroom 3400 sq ft house. just sold at auction, 195,000 and i think its to much money..houseing will continual to drop at a rate of 20-30 percent for the next 2 to 4 years..

[footwork99]

In reference to Countrywide and their situation, I need to know whether I can trust this company to do a refinance on a home with integrity? It involves on party buying the other party out, but Im being told that is and when it goes through, the individual will from Countrywide, we go in and sign, and "Have TO" leave the next day. This is ludicrous. So if I go rent an apartment and it doesnt fall through for the individual, then Im stuck with 2 mortgages? This is 2ndhand knowledge from the person wanting to buy us out, which is not a problem, but how can they say 120,000, when no inspector has come to do a Market Value Appraisal. Do I need to get my own appraisal to cover myself? Is this company trustworthy is my biggest concern. Thank you for your time and response to my email.

Respectfully,
-D

[footwork99]

In reference to Countrywide and their situation, I need to know whether I can trust this company to do a refinance on a home with integrity? It involves on party buying the other party out, but Im being told that is and when it goes through, the individual will from Countrywide, we go in and sign, and "Have TO" leave the next day. This is ludicrous. So if I go rent an apartment and it doesnt fall through for the individual, then Im stuck with 2 mortgages? This is 2ndhand knowledge from the person wanting to buy us out, which is not a problem, but how can they say 120,000, when no inspector has come to do a Market Value Appraisal. Do I need to get my own appraisal to cover myself? Is this company trustworthy is my biggest concern. Thank you for your time and response to my email.

Respectfully,
-D