Use access key #2 to skip to page content.

B of A and Countrywide

Recs

13

July 21, 2008 – Comments (16)

Interesting that Bank of America somehow wants to take the part of Countrywide that makes money and walk away from the debt obligations. 

This really makes me concerned about bonds over all.  There are no guarantees when you invest but this just seems corrupt. 

Wel, the whole investment world seems corrupt...

16 Comments – Post Your Own

#1) On July 21, 2008 at 10:54 PM, TDRH (99.68) wrote:

It does seem corrupt, but as a  longer terim stockholder I hope they get away with it.    When they invested 2 Billion in CFC, I did not understand it, when they agreed to buy them, I did not understand it.   Too stubborn to sell, and they no longer represent a dangerous percentage of my portfolio after $28 haircut.

Report this comment
#2) On July 21, 2008 at 11:37 PM, LordZ wrote:

Well when you have bought and paid for Senators Obama and Clinton... why not ?

not to mention Dobb....

 

Report this comment
#3) On July 21, 2008 at 11:38 PM, agchris02 (< 20) wrote:

Hey, I didn't understand it either, but I made a killing on it :).

Report this comment
#4) On July 21, 2008 at 11:40 PM, LordZ wrote:

Countrywide Financial loan scandal

As Dodd in his role as chairman of the Senate Banking Committee proposed a housing bailout to the Senate floor in June 2008 that would assist troubled subprime mortgage lenders such as Countrywide Bank in the wake of the United States housing bubble's collapse,[22] Conde Nast Portfolio reported that in 2003 Dodd had refinanced the mortgages on his homes in Washington D.C. and Connecticut through Countrywide Financial and had received favorable terms due to being a "Friend of Angelo" — a friend of Countrywide CEO Angelo R. Mozilo.[23] Dodd received a $75,000 reduction in mortgage payments from Countrywide at allegedly below-market rates on his Washington, D.C. and Connecticut homes.[22][23] Dodd has not disclosed the mortgages in any of six financial disclosure statements he filed with the Senate or Office of Government Ethics since obtaining the mortgages in 2003. [24]

Dodd's press secretary said the "Dodds received a competitive rate on their loans," and that they "did not seek or anticipate any special treatment, and they were not aware of any," then declined further comment.[25] Republican State Chairman Chris Healy stated that "Dodd has crossed the ethics line by obtaining two generous mortgage deals with a company that is the corporate poster-child for the national subprime lending meltdown."[26] The Hartford Courant reported Dodd had taken "a major credibility hit" from the scandal.[27] The Chairman of the Senate Budget Committee Kent Conrad and the head of Fannie Mae Jim Johnson also received mortgages on favorable terms due to their association with Countrywide CEO Angelo R. Mozilo.[28][23] The Wall Street Journal, the Washington Post, and two Connecticut papers have demanded further disclosure from Dodd regarding the Mozilo loans.[29][30][31][32]

On June 17, 2008, Dodd met twice with reporters and gave conflicting accounts of his deals with Countrywide. He admitted to reporters in Washington,DC that he knew as of 2003 that he was in Countrywide's VIP program, but claimed it was due to being a good customer, not due to his political position. He omitted this detail in a press availability to Connecticut media.[33]

Countrywide has also contributed a total of $21,000 to Dodd’s campaigns since 1997. [23] Dodd has received approximately $70,000 in campaign contributions from Bank of America, who is buying Countrywide, in the last year-and-a-half before the Countrywide Financial loan scandal broke. [34] Only Senators Barack Obama and Hillary Clinton have received more Bank of America money than Dodd.

 

Report this comment
#5) On July 22, 2008 at 12:39 AM, lquadland10 (< 20) wrote:

Will all the whistle blowers please come froward in droves and help clean up the president vice pres popsci reid dodd Rove Clinton mc cain oboma Frank and everyone else in America.

Report this comment
#6) On July 22, 2008 at 1:00 AM, DemonDoug (60.67) wrote:

Bondholders have rights before stockholders.  There is NO WAY that the bondholders will just let BAC do this.  I wouldn't be surprised to see lawsuits start flying as early as tomorrow, and if not tomorrow then very soon.

The naked capitalist link that mish provided stated that what BAC is doing is called "fraudulent conveyance," and I agree with this assessment.

I can hear the lawyers cracking their knuckles right now...

TD I'd sell that pig on any rally you can get.  It's going down brother.  We're all going to be JPM customers 10 years from now :P

Report this comment
#7) On July 22, 2008 at 1:03 AM, lquadland10 (< 20) wrote:

I will watch for when the restriction of 10%  limit be resinded to keep the banking system going. AMERICA, Home of The Slave.  

Report this comment
#8) On July 22, 2008 at 7:54 AM, Richthofen80 (90.70) wrote:

walk away from the debt obligations. 

Heck, why not? That's what their loan customers are doing, walking away from properties that have dropped in value, regardless of the mortgage they signed. If its good for the gander, its good for the goose.

Report this comment
#9) On July 22, 2008 at 8:07 AM, Richthofen80 (90.70) wrote:

walk away from the debt obligations. 

Heck, why not? That's what their loan customers are doing, walking away from properties that have dropped in value, regardless of the mortgage they signed. If its good for the gander, its good for the goose.

Report this comment
#10) On July 22, 2008 at 8:46 AM, Richthofen80 (90.70) wrote:

walk away from the debt obligations. 

Heck, why not? That's what their loan customers are doing, walking away from properties that have dropped in value, regardless of the mortgage they signed. If its good for the gander, its good for the goose.

Report this comment
#11) On July 22, 2008 at 9:12 AM, TMFHelical (99.12) wrote:

It is unlikely that BAC will abandon Coutrywide's bond or preferred stock holders.  I should say that I am one of the former.  What BAC did do was absorb Countrywide into a fully owned subsidiary instead of directly into the company.  This is a legal move and a smart one considering the lawsuits pending against countrywide. 

Here is some good commentary pre-merger

http://us1.institutionalriskanalytics.com/pub/IRAstory.asp?tag=277

 TMFHelical

Report this comment
#12) On July 22, 2008 at 10:55 AM, dwot (49.32) wrote:

lquadlan10, that video reminds me of when free trade first went through between Canada and the US. 

Canada saw so many jobs leave to the US as manufacturing was moved to single plants.  I think that was expected, but we were supposed to pick up on the forestry jobs but the US put up tarriffs that were later found to be in violation of the free trade agreement. 

The parts of the deal that should have benefited Canada were cheated on and Canada being hit first initially buffered the US.  I can't say I have sympathy to see the US going through the same thing Canada went through.  I think it needs to happen in order for people to see the lack of wisdom of free-trade and letting corporations run the world.  Ultimately corporations are destroying themselves by cutting off the buying power of those who used to have the money to buy their products.

And blocking Canadian forest products also cost the average American more money.  Because our dollar was so weak we were able to supply wood products for considerably less, around 20% less.  Instead any product with wood had the extra costs built into it, like say, housing.  But, some American corporations made a lot of money from doing that.

But hey, allowing a few to exploit and make money at the expense of the rest is what it all about.

Report this comment
#13) On July 22, 2008 at 1:23 PM, ajm101 (32.75) wrote:

Dear Lordz, loan rates are dependent on the fiscal health of the borrower.  All people with above average assets and earnings (politicians included) will get better than average loan rates.  I'm glad I could clear up your confusion.

Report this comment
#14) On July 22, 2008 at 1:25 PM, TDRH (99.68) wrote:

There has to be some backdoor agreement as to why BAC would rescue and then buy them.   After their initial investment they had some serious time to access the records of the company.  

As for JPM, they are no better off.  Their derivative exposure, when combined with Bear Stearns is even higher than BAC.

 

Report this comment
#15) On July 22, 2008 at 1:55 PM, agchris02 (< 20) wrote:

The one thing that no one is considering here is the huge potential tax writeoffs for BAC.  I'm assuming (and we all know what that does) that BAC is banking on a a financial sector rebound in the next 1-3yrs.  In that case, taxable consequences could be huge, coupled with a nice portfolio of profitable mortgages.  Assuming of course each one of those doesn't default/devaule/write off, etc. etc.

 That said, i don't own either of these (well impossible for CFC now), but I want to see more fallout first.  There are much more interesting banks to jump on right now, as some of the strongest are grossly undervalued.

Report this comment
#16) On July 22, 2008 at 2:31 PM, LordZ wrote:

@ aim your an idiota...  you obviously didnt understand...

or choose to not comprehend... but hey if these banks and loaners did their jobs they shouldnt be so fubared right...

the industry shouldnt be so fubared.... I laugh when I hear about the story of this one guy who supposedly refinanced his luxury boat and stopped paying and they come to try to foreclose, however because they don't have all the proper paper work and cannot locate his loan documentation or be certain as to who owns what if any debt, he simply shooooes them away.....

laughing his A off....

aim I am laughin at you thinking you needed to clear or thinking you could... your quite the fool....

I hope that clears up your confusion...

 

Report this comment

Featured Broker Partners


Advertisement