Bank of America To Walk Away???
On January 10th I wrote B of A in Talks to Buy Countrywide
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Bank of America Agrees to Buy Countrywide for $4 Billion The deal rescues the country's largest mortgage lender and expands the financial services empire of the nation's largest consumer bank. The transaction would value Countrywide at $7.16 a share.Reuters and Forbes are both suggesting that B of A is on the verge of either backing out of the deal or renegotiating the price.
Bank of America faces $20 billion to $30 billion in write-downs once the deal closes because it has to mark Countrywide's loan portfolio to market, according to Paul Miller of Friedman Billings Ramsey, who said in a research note Monday that Bank of America should cut its price from $7 a share to $2 a share or less.B of A seems to be wary of Countrywide's option ARM portfolio which according to S&P Equity Research analysts has not been stress tested.
Posted by movermike on
Monday May 5, 2008 at 5:59pm
