Is BofA Finally Quieting the Ghosts of Countrywide Financial?

  Google+  Twitter | + More Articles
  • Like on Facebook
  • Share on Google+
  • Share on LinkedIn
Bank of America

Source: http://www.flickr.com/photos/afagen/

In 2007, as the various storm fronts of the late-2000s financial crisis were beginning to collide and America’s major financial institutions were not yet flirting with disaster, Bank of America (NYSE:BAC) announced a $2 billion investment in Countrywide Financial Corporation, then the largest mortgage lender in the United States. The investment was made in the form of a massive non-voting security that would yield 7.25 percent per year and could be converted into common stock at $18 per share.

Bank of America’s then-Chairman and CEO Kenneth Lewis commented in a press release at the time that, “We believe that in the current turmoil the stock market has been underestimating the value in Countrywide’s operations and assets. This investment reflects our confidence in their business and recognizes the importance of the company in providing home financing across the country. We hope this investment will be a step toward a return to more normal liquidity in the mortgage markets. Countrywide has a strong mortgage origination business and it services the mortgages of one in seven American households.”

Just a few months later, in January, Bank of America announced that it would buy the entire corporation for about $4 billion. By March of that year, reports surfaced that the FBI was investigating Countrywide over allegations of fraud relating its its sale of mortgages.

More Articles About:

To contact the reporter on this story: staff.writers@wallstcheatsheet.com To contact the editor responsible for this story: editors@wallstcheatsheet.com

Yahoo Finance, Harvard Business Review, Market Watch, The Wall St. Journal, Financial Times, CNN Money, Fox Business