Countrywide Deal Looking Bad for B of A

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What seemed like a great idea at the time has cost Bank of America Corp. nearly $1 billion.


Since the Charlotte-based banking giant invested $2 billion in struggling Countrywide Financial Corp., the biggest U.S. mortgage lender, the investment has shed nearly half its value, on paper, since the deal was announced in August.


Shares in Countrywide have been in a free-fall, losing 14 percent Monday and, at one point, nearly 20 percent today, amid speculation the Calabasas-based firm may file for bankruptcy.


Bank of America purchased preferred-stock investment to help bail out the lender amid the global credit crunch has the right to convert the preferred stock to common shares at $18 each back when the stock was trading in the low-to-mid $20-range. Today, shares closed down 2.8 percent to $10.28, meaning the deal has cost bank of America nearly $900 million on paper.

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