Bank Of America And Countrywide

May 2nd, 2008 @ 7:43 PM by Alden Smith

We all see a lot of news about Countrywide, and what this company has had to go through in the past year.  I think no one can lay all the blame at their doorstep, but surely their practices have not exactly been above board.  Their practices have after all been focused on making money, and when things were ripe, they did a good job of it.  Being in business means taking advantage of every situation that affects the bottom line.  Ask any business owner.

Now, I read that BOA is saying that they will not be responsible for debt incurred by Countrywide on takeover.  This is not surprising, considering that BOA bought out Countrywide at bargain basement prices.  According to BOA, Countrywide had outstanding debt of about $97.23 billion as of Dec 31, including Federal Home Loan Bank advances to Countrywide Bank of about $47.68 billion dollars.  A lot of cash, no doubt.  And BOA is walking away from this liability.

BOA has the position that what they want from Countrywide is the Midwestern retail bank operations.  This would fit into the grand scheme of things, as BOA is a bit weak in this area.  What I have to wonder is how all of Countrywide’s outstanding debt is going to play out.  They owe a lot of bucks.  Who is going to eat this?  The taxpayers?  One would hope not…