Bank of America (NYSE: BAC) may have scored a shot at big tax savings with its acquisition of Countrywide Financial (NYSE: CFC), but it may also have acquired a liability to go along with it.
Like a lot of other subprime lenders, Countrywide's business practices are under a lot of scrutiny of late. A piece (subscription required) in today's Wall Street Journal looks at details of some of Countrywide's practices that have emerged during the bankruptcy proceedings of debtors.
There could be some liability there. There's also an SEC investigation of the perennially uber-tan Angelo Mozilo's stock sales, and shareholder lawsuits accusing the company of violating securities laws. State attorneys general are also taking a look at the company.
Of course Bank of America made efforts to estimate the extent of the possible liability before doing the deal. And the hundreds of millions Bank of America will save on its taxes because of the deal should offset the cost of any settlements with those pesky regulators. Uncle Sam giveth, Uncle Sam taketh away, but if you're Angelo Mozilo, he mostly giveth.
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Reader Comments (Page 1 of 1)
1-17-2008 @ 12:06PM
boyd belcher said...
if any one is considering getting insurance with balboa ins.dont they will not pay there claims,balboa belongs to countrywide,bad co.if any one has had this problem e-mail me please!
1-17-2008 @ 6:00PM
Glen said...
Countrywide is my lender for first mortgage and equity loan. I've always pay my mortgage and equity before grace period(10days). Last mothgot a letter that my equity line was frozen. I was 1 day over grace. Called and was told it wouldn't hurt my credit and that all though i was a good customer the freeze was computer generated for every acoount over grace even by 1 day. probably thousands of good customers screwed because they are desperate. Be aware. this is becoming a very scary uncarrying company.