Comments on: Bank of America bets heavily on Countrywide. http://www.hooversbiz.com/2008/01/11/bank-of-america-bets-heavily-on-countrywide/ Individuals - Companies - Industries: How We Work Now. Wed, 28 Jul 2010 23:09:19 +0000 hourly 1 http://wordpress.org/?v=3.0 By: Tim Walker http://www.hooversbiz.com/2008/01/11/bank-of-america-bets-heavily-on-countrywide/comment-page-1/#comment-2450 Tim Walker Sat, 12 Jan 2008 15:09:00 +0000 http://www.hooversbiz.com/2008/01/11/bank-of-america-bets-heavily-on-countrywide/#comment-2450 anon: You make an excellent point, and indeed that has to be the logic behind Ken Lewis's move: get that big, fat portfolio of well-paying mortgages, and get it at a substantial discount. It still leaves open for question: just HOW big and HOW bad the liabilities will be from the small minority of mortgages that have blown up. The success of this deal is going to hinge on return on investment, and those bad mortgages -- and anything else that might hiding in Countrywide's cupboards -- are going to exert inordinate influence on the ROI formula. The worry from Wall Street: that this is really good money after bad, trying to make something out of the $2 billion investment that BofA made a few months ago -- an investment which is now worth about a quarter on the dollar. anon: You make an excellent point, and indeed that has to be the logic behind Ken Lewis’s move: get that big, fat portfolio of well-paying mortgages, and get it at a substantial discount.

It still leaves open for question: just HOW big and HOW bad the liabilities will be from the small minority of mortgages that have blown up. The success of this deal is going to hinge on return on investment, and those bad mortgages — and anything else that might hiding in Countrywide’s cupboards — are going to exert inordinate influence on the ROI formula.

The worry from Wall Street: that this is really good money after bad, trying to make something out of the $2 billion investment that BofA made a few months ago — an investment which is now worth about a quarter on the dollar.

]]> By: anon http://www.hooversbiz.com/2008/01/11/bank-of-america-bets-heavily-on-countrywide/comment-page-1/#comment-2448 anon Sat, 12 Jan 2008 14:32:07 +0000 http://www.hooversbiz.com/2008/01/11/bank-of-america-bets-heavily-on-countrywide/#comment-2448 Countrywide is losing money now, but it originated $408 billion in new mortgages last year. And despite all the bellyaching about the subprime mortgage crisis, try to think about it from a fatcat banker's perspective. Bank of America just can't wait to get its hands on the 93% of Countrywide's mortgage portfolio that is still being paid on time. Countrywide is losing money now, but it originated $408 billion in new mortgages last year. And despite all the bellyaching about the subprime mortgage crisis, try to think about it from a fatcat banker’s perspective. Bank of America just can’t wait to get its hands on the 93% of Countrywide’s mortgage portfolio that is still being paid on time.

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