January 10, 2008

Two words of advice for Bank of America regarding Countrywide Toxic Mortgage: Due Diligence


Also make sure your folks use disinfectant after shaking hands with The Orange One.

Seriously though, it should be painfully obvious to the B0fA auditors that the "assets" on CFC's books are worth nowhere near what Countrywide says they are.

They made loans to liars. They called them "liar's loans". They ain't getting paid back. And Countrywide if left alone would simply go bankrupt.

Why BofA would want to pay more than $1 for CFC is beyond me. And I doubt they, or anybody else, will.

BofA - haven't you already lost enough on your stupid and reckless Countrywide mistake already? You blazing idiots - we told you a few months ago you were going to get the CFC VD if you took Angelo home for the night and you went ahead and did it. And now you're looking to marry him? Man, some guys are hopeless. Unless there's a shotgun involved, this marriage makes no sense. Sounds like a classic pump and dump to me!

NEW YORK, Jan 10 (Reuters) - Bank of America Corp is in advanced talks to buy struggling Countrywide Financial Corp, the largest U.S. mortgage lender, several people familiar with the matter said on Thursday.

Angelo Mozilo, its co-founder and chief executive, has been a lightning rod for critics who say he encouraged loose lending practices that contributed heavily to the housing crisis.

Mozilo has also been faulted for collecting hundreds of millions of dollars in compensation this decade from pay, bonuses, awards and stock options, including millions of dollars after it was clear the housing crisis had begun. In July, he called the slump the worst since the Great Depression.

Bank of America in August bought $2 billion of Countrywide preferred shares convertible into a roughly one-sixth stake in the lender.

43 comments:

Princess Mononoke said...

*
*
*
BofA has first right of refusal... So I hope this meeting is simply just a formality.

Perhaps, BofA CEO is enjoying watching Tangelo grovel now after being to damn cocky this past year!

End of meeting scenario: BofA CEO stands up and says SEE YA wouldn't want to be ya and walks away! lol ;)

Anonymous said...

What if the fed forced them to?

Edgar said...

*
*
*
*
*
*
*
*

CFC = Pig in a python.

Anonymous said...

I don't get this deal at all.

Anonymous said...

FAN-FUC#$ing-TASTIC picture Keith!

Says it all!! Shotgun wedding courtesy of the FED!!

Bernanke is whipping them with the Bible! LMAO

Anonymous said...

I wonder if they are planing on cutting them up and selling them off? Perhaps using a bad investment as a tax write off?

fish said...

Jim Sinclair is positing that B of A is buying Countrywide to extinguish derivative exposure the B of A had via Countrywide to subprime! Buy the other side of the transaction and bigger problems go away!

Princess Mononoke said...

Yeah Keith, You ARE the Photo HUNTER! You always find the best most appropriate pics... Kudos!

Anonymous said...

A couple of things

Who let this Mozillo creature get so much power?

The government should take his millions and distribute it to his company's debt.

BOA is getting ready to lay off thousands. I've heard as high as 15k. They will be fully automated (whatever that means) and the rest is going to India.

Nice hugh

Bitterrenter said...

Someone is going to make LOTS of money on this, probably by some scheme of getting public $$$ a la the S&L debacle.

After all, this is capitalism. What would it be without corruption and a handful getting rich at the expense of many?

Shakster said...

"Sounds like classic pump ,and dump"
Exactly Kieth.
BoA has it's own mess,and Wall Street makes it's money in con games,vigs,and running it's rigged casino.

Anonymous said...

The motives for this are many:

1-Save fase for losing over 1 billion to date from the earlier cash infusion.

2-Extinguish CDO liabilities that would have fallen back onto BOA's books once CFC went under.

3-Get assets at firesale prices. All 9 trillion in the servicing cannot be bad, but if you buy it at a steep discount then all the extra positive revenue from the good part of the portfolio will make up for all the toxic slime.

4-BOA has been on an expansion for years into all sectors of banking.

Retail/military - w/ Nations bank

Credit Cards - MBNA

Now Mortgage servicing - Countryslide

Its a bold/dangerous move, but who know maybe it really is also a shotgun wedding w/ Paulson's finger on the trigger pointed at Tangilo's jumbo grapefruit of a head.

Anonymous said...

I'm adding an extra seatbelt on the 2008 rollercoaster and it's only 10 days in. Bring it!

Anonymous said...

so how much will BofA have to pay the FHLB if they take on this carcass? or will FHLB forgive the debt and that's the huge bailout?

it was $51 billion thru September, i think.

Anonymous said...

Dude come on you can't be so naive. Of course someone was going to buy CW at such a low price.

How did everyone's puts do today?

2 rally days in a row...look for a huge day again tomorrow

Anonymous said...

BofA - haven't you already lost enough on your stupid and reckless Countrywide mistake already?
---------------------------------------

Oh, I am sure bofa hedged so they were protected from any downside, which means they earn, what was it, 7%, 7.5% plus they will be one of the first in line to pick up the pieces of any value.

My only question is why buy CFC now? just wait a while and it will crash and burn then you pick the pieces you want.

Yoski said...

Good time to short BofA

Anonymous said...

Man, I have listened to lots of commentary about this potential deal today, and am kind of freaking.
I am a CFC employee-(hold those tomatoes)--and of course wondering if this really is a BK and they are just in talks to take over the servicing....?? As has been said today, BAC has had months to look under the hood, and so, WHYYYY would they want to just take over the whole enchillada?
Makes more sense that they are just gutting the good stuff before the company goes under...??!!!
CALGON! Take me AWAYYYYYYYYYY!!!

WINGS said...

I like it when powerful but shady businessmen quake in their boots.

I enjoy knowing that Mozillo may have to pay for what he's done.

I'm going to pray for punishment. I want this man punished for what he has done and will not rest until justice is served.

I will take great pleasure when he is formally tried.

Time to break out the chips and soda.

Punish him now!

I shagged hilary said...

Did you guys see the new claims against ron paul? Someone is getting scared as ron paul gains momentum.this crooked politics as usuaul.I can imagine hilary's crooked campaign behind this crap.

This merger reeks of corruption. I think the feds are trying to do anything to keep cfc afloat.I wonder how much the feds are giveing bofa?The tan man is laughing all the way to the bank.

chris g said...

This is going to make you puke.

Herb Greenberg believes that the Fed is behind this deal, and that as part of the deal, the Fed is guaranteeing Bank of America certain losses on Countrywide's subprime slime.

Anonymous said...

Countrywide, IndyMac Shut Out by Warehouser

Warehouse lender Southwest Securities warns customers


Southwest Securities FSB is removing Countrywide Home Loans and IndyMac Bank from its approved investor list, the company told MortgageDaily.com.

The move was made in light of movements in the share prices the two companies, an executive said.

"We started to believe that the stock price is mimicking the movements of some of the other lenders that imploded," he said.


MortgageDaily.com subscribers read full text of this story

Anonymous said...

It's got to be a government intervention. Who else could do the deed besides B of A. And with todays probable rate cut statement, I conclude we are in deep trouble now.

I thought to buy gold Monday when it was $865 but reasoned a correction was due. Now it's $890:{

What too do? At least I have some mining stocks that are doing well:}

Anonymous said...

Folks, mebbe these guys are trying to divert attention from their participation in Mozillo's shenanigans? Why jump into what you know to be a mess?

Anonymous said...

Anything these guys do at this point will only make the crash that much worse. The system is dead and there is nothing they can do to revive it under it's present structure.

Honest Abe said...

Jim Sinclair is positing that B of A is buying Countrywide to extinguish derivative exposure the B of A had via Countrywide to subprime! Buy the other side of the transaction and bigger problems go away!

January 10, 2008 11:40 PM

In the early 1990's we were told that derivatives made the system that much more safe and efficient.

Obviously that isnt the case. With $700 trillion in derivative claims outstanding the system is defacto bankrupt. Every bank in the United States is implicitly bankrupt. The longer they wait to declare the system dead the more risk they assume of war, terrorism etc.

borkafatty said...

So CITI is next to be bought out by WaMu ...My glass Bong just spoke to me and told me so.

whitetower said...

Memo to Bank of America: You get what you pay for.

Anonymous said...

The only positive I see for BAC is the massive tax savings due to CFC portfolio write downs

Anonymous said...

CFC trading at 20% of book. Many of the big "losses" reported over the last 6 months have been paper losses only, because there simply is no market for these bad loans. Banks have had a regulatory gun to their heads to raise capital, creating an opportunity for vulture capital firms to buy the paper at firesale prices. For the strong, today's mark-to-market losses are tomorrow's "surprise" earnings upside when the default rates don't turn out be as bad as feared and foreclosures record some of the losses. I mean sheesh, some of this paper was trading at 70 cents on the dollar - in other words, as if 50% of the loans will default and less than 50% of the loan value will be recovered in foreclosure.

me in O.C. said...

BofA doesn't need to worry. The Fed will guarantee that BofA won’t lose any money if the CW’s assets drop. I think this would be the worst kind of government screw-ups, but this could happen. I wish I could go buy something and the Fed would guarantee I won’t lose money on it.

chslaxcoach said...

I have to tell my own personal Countrywide story from yesterday.

So, some fine young college drop-out called me to indicate that since I had a fine record of paying off my Countrywide-owned mortgage on time, I was eligible for the special du jour. My loan is a 30-year fixed on about $100K at 5.626%. My P & I payment is about $600.

He indicated that I should consider shortening the term of my loan to 15 years with an interest rate of 5.125% and I could save $4900 in interest per year on my loan. This was an intriguing deal for sure, especially considering I only pay $4800 per year in interest currently and that number is steadily decreasing.

Let me take you through his crazy math. He said I would pay $79000 less over the life of my loan compared to my current deal. He then took $79000 and divided it by 15 years.

(Of course, if he wanted to compare apples to apples, he would have had to compare how much extra interest I would pay if I increased my monthly payment enough to pay off my loan in 15 years using my current rate versus his new rate.)

I didn't mean to be rude, by I was pretty much laughing at him at this point. So, I asked the question that had been in my mind for a while. Would Countrywide be desperate enough to allow me to pay off my loan for less than the full amountr? So, I said to the guy, "I know Countrywide is in a position where they could use some cash, do you have any sort of deal where I could pay my loan off today at some type of discount?"

His response was classic. He actually said, "I don't know what you mean. I don't know what you have been reading. It's not like we're in bankruptcy or something."

Who said anything about bankruptcy? Not me. Perhaps, he had been reading HP as well.

Princess Mononoke said...

Have you guys seen Tangelo lately. The last time I saw him on the tube was in December interviewing with Maria B.

He looked sooooo drained, skinny, rinkled but still dark of course. You can actually see the worry on his face. For one split second I actually felt sorry for him... BUT then I snap out of it quickly!

I immediately remembered how cocky and arrogant he was this past year knowing the ship was going DOWN! He always looked like a mafia leader to me... always flashing his BIG gold ring in every interview.

eric in vegas said...

If BofA buys Countrywide outright it will go down as the worst move of this housing/financial crisis.

eric in vegas said...

Never seen a shotgun wedding until now:

Fed favors Countrywide buyout:

http://tinyurl.com/22w3fd

Anonymous said...

GUYS,

The problem here is that if Country Wide goes Bankrupt, it will take a whole bunch of banks with it. Trust me.

They will be forced to mark down their worthless junk and hell is going to break loose. You are talking big banks, such as BofA going out of business. So, you see, they are not doing it because it makes business sense. They are doing it to stay alive. Im pretty sure they are not the only ones behind this takeover.

Danny

Anonymous said...

NEWS FLASH:

BofA OFFERS $4 BILLION FOR COUNTRYWIDE!

consultant said...

Sorry Keith, my comment in the above post should have gone here.

Paul E. Math said...

It's official - I just read it on Yahoo news. On the surface, this is just such a bad move. The true reasons must be, as people are saying, so avoid everyone's assets being marked to market. Don't these people think at all? Don't they realize that they are living in a house of cards that is destined to crumble, that they are just prolonging the inevitable, making the ultimate day of reckoning that much worse??

Keyser Soze said...

Merle Haggard said it best: it ein't love, but it ein't bad.

Anonymous said...

Paul e math,

You got it. They are all shaking in their boots as they will have to mark to market. Once they do, itll be all over.


And that is what they are afraid of here.

Danny

Anonymous said...


After all, this is capitalism. What would it be without corruption and a handful getting rich at the expense of many?


Same as Cuba, Venezuela, and North Korea. Kim Jong Il isn't exactly living on tree bark and water like the rest of his subjects.

Anonymous said...

Why BofA would want to pay more than $1 for CFC is beyond me.

Because they made a sweet deal with the shady government + Bernanke. If Countrywide went bankrupt, the market would totally collapse overnight. Don't be surprised if the BOFA loss is paid with taxpayer money.

The crooks running the country are doing whatever they can to not let any major bank to go under, if you haven't noticed.

Nobody would pay a dime for that Countrywide cancer, especially with the zillion class action suits coming up and an uncertain mortgage market.

It's all rigged!