Recently Bank of America announced they were going to buy the troubled home-loan company, Countrywide. Even with Countrywide on the verge of bankruptcy, B.o.A. thought the purchase would be a perfect fit for the mammoth banking institution, according to the Los Angles Times.
As Countrywide Financial Corp.'s stock price cratered and bankruptcy rumors swirled, Bank of America Corp. remained convinced that the largest U.S. home-loan company had a valuable franchise despite years of aggressive lending that left it buried in losses.
Kenneth D. Lewis, chairman of the nation's largest consumer bank, had been well-disposed toward Countrywide since the summer, when teams of his employees first examined the operations and books of the Calabasas-based mortgage colossus.
According Lewis, his staff kept coming back and reporting that Countrywide, was a "well-run mortgage company," at the grass-roots level. . "Its systems are good and its people are good."
Countrywide agreed last week to a $4-billion takeover by Bank of America. Countrywide would become a Bank of America unit and could retain its name depending on a review of how the public perceives the brand, bank officials said.
Talking optimistically about his troubled takeover target, Lewis said Countrywide was successfully reshaping itself as a more prudent lender, one poised to benefit from refinancings as interest rates fall.
The deal, expected to close in the third quarter, marks a reversal for Lewis, who had often expressed distaste for the mortgage industry's potential for questionable lending and unwieldy accounting. He had vowed repeatedly not to buy a home lender.
When Lewis became Bank of America's boss in 2001, the company quit making sub-prime mortgages to shaky borrowers (although its investment banking arm recently lost billions of dollars on sub-prime-related securities).
The bank also recently stopped making mortgages, even prime ones, through brokers, and instead became No. 1 in retail, or direct-to-consumer, mortgages by pushing no-fee loans through its vast branch system.
- Los Angles Times
According to bank officials B.o.A could retain the home-loan company's name depending on a review of how the public perceives the Countrywide brand.
Image courtesy of ABC News
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