Do you remember Countrywide Mortgage? Just before the subprime debacle, Countrywide was one of the biggest players in the mortgage business. A man named Angelo Mozilo became chief executive. The company was on a roll. Its motto was "let's think outside the box." And it did.

Countrywide was the first to process applications by computer. Then it let the computer assign a credit score. Then, in a bizarre move, if the credit score was too low, Countrywide just tacked on a few more percentage points to the interest on the mortgage.

Shares of Bank of America (NYSE: BAC) are down about 90% over the past year, but CEO Ken Lewis somehow still has his job.

In an interview with Maria Bartiromo, Lewis managed to express confidence and, even more amazing, a belief that his decisions to acquire Merrill Lynch and Countrywide Financial will ultimately prove to have been intelligent -- within two years: "I'm not making predictions, but I think that in the next two years we can show that every acquisition was a good acquisition. "

Once mortgage-backed securities write-offs began to drop, earnings at American banks were supposed to get better. In 2009, There was actually some hope that earnings in the sector might get better, even if it was only by a modest amount. But, the news over the last several days has been grim and bank stocks are moving back to multi-year lows.

There has been a perception that one of the large financial firms that would be better than OK was Bank of America (NYSE:BAC). It had the balance sheet to takeover Countrywide and Merrill Lynch. With the revenue from those companies and all the cost cuts BAC could make by putting the operations together, it would be more than fine. It would be the next large world financial supermarket.

The vision of Bank of America as a successful enterprise has taken a turn for the worse, and the government may end up owning more of the company than it would like to. According to The Wall Street Journal, "The U.S. government is close to finalizing a deal that would give billions in additional aid to Bank of America Corp. to help it close its acquisition of Merrill Lynch & Co." The acquisition was not supposed to require any outside capital at all.

Wall St. is now left with the question of how many more shoes are left to be dropped. The $350 billion left in the TARP fund is supposed to go to helping the mortgage market. At least that is how many members of Congress see it.

But, some reasonable portion of the fund may not go where it was planned. Big banks may need to siphon off more than anyone in the federal government could have imagined.

Douglas A. McIntyre is an editor at 247wallst.com

This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.

Of the 15 components on our Cheap Stocks roster, Goldman Sachs Group (NYSE: GS) is the one that my colleague Nick Perry dubbed "a bold choice." With plenty of question marks still surrounding the major financial names, there are undoubtedly those who will go even further and dub this pick "an unwise choice." On the other hand, some will probably just say we're stealing Warren Buffett's idea. With all potential criticisms thusly taken into consideration, let's take a look at what makes Goldman so hard to resist.

First, let's be upfront about the fundamentals. Amid the recent financial crisis, Goldman Sachs is one of the few major names on Wall Street that still has a pulse. Although it's now a bank holding company rather than an investment bank, Goldman stands out by sheer virtue of the fact that it has dodged bankruptcy rumors and has not needed an emergency rescue by one of its peers.

In fact, Goldman Sachs survived because it knew that most of those subprime-derived securities were toxic, and placed bets that the investments would lose value. Regardless, the bank still sold those securities to its clients, so we're not talking about the financial equivalent of Mother Theresa. On the bright side, nor are we discussing the financial equivalent of Nero -- and in today's market, there are plenty of favorable comparisons to be made between GS and its sector peers.

Given the continued deterioration in the financial markets and mortgage industry, it seems likely that Bank of America (NYSE: BAC) badly overpaid for Countrywide Financial -- if the company's equity was worth anything at all.

This latest bit of news won't help. Attorneys general offices in California and Illinois have negotiated a settlement with the lender that will require Countrywide to modify terms on tens of thousands of loans. The settlement will offer strapped California borrowers $3.5 billion in relief, and if all 50 states sign on the total price could soar as high as $8.7 billion, according to the Illinois Attorney General's office. So far, Arizona, Connecticut, Florida, Iowa, Michigan, North Carolina, Ohio, Texas and Washington have joined Illinois and California in the deal.

In a statement, California Attorney General Jerry Brown Jr. said that "Countrywide's lending practices turned the American dream into a nightmare for tens of thousands of families by putting them into loans they couldn't understand and ultimately couldn't afford."

Of course, Bank of America knew going into the deal that it would have billions in litigation expenses to deal with but the downward spiraling of the economy has given CEO Ken Lewis a lot less margin for error. There are still shareholder class-action lawsuits and piles of consumer litigation to be sorted through, and, at a minimum, he has to be wishing he'd saved his ammunition to acquire cheaper assets in the midst of the carnage.

Long-term, it seems doubtful to me that the Countrywide Financial brand has any value at all. Why would anyone go to the poster child for the biggest real estate meltdown in history for a loan?

The New York Times reports that following its acquisition of Countrywide and Merrill Lynch & Co., Inc. (NYSE: MER), Bank of America (NYSE: BAC) may well be the dominant U.S. bank. Will that make it too big to fail in the years ahead? Or is it likely that when the economy recovers, it will have the strongest operation in place to grab a big share of that growth.

Its recent purchases indeed give Bank of America a strong market position in many segments of the financial services market. "Overnight, the shotgun merger will transform Bank of America into the nation's largest player in wealth management. It already holds the biggest branch network and is the largest issuer of credit cards, home equity loans and auto loans. In January, it paid $4 billion for Countrywide Financial, the troubled lender that was the nation's largest mortgage lending and payment collection operation," writes the New York Times.

With big acquisitions can come big risks. For example, Merrill still has plenty of problems with "$40 billion of real estate mortgage investments and $17 billion in commercial buildings," according to the Times. As I posted, Merrill had $40 a share worth of salable assets and Bank of America's $29 a share price effectively valued its liabilities at $11 a share. I admire the strategic boldness of Bank of America buying up market leaders at what may look in the future to be distressed prices.

But it remains to be seen whether those distressed prices were in fact too high because the liabilities Bank of America bought may turn out to be bigger than it gambled. If not, and if the economy recovers, Bank of America would be a screaming buy.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Some things never change.

David Sambol, the out-going president of kaput mortgage giant Countrywide Financial Corp., is taking his family on an African vacation -- on Countrywide's Gulfstream IV.

Yes, the guy in charge of the company that sold hundreds of thousands of suspect mortgages to people who couldn't afford them is leaving on a jet plane, for a nice three-week-long vacation in Africa with his family.

But you know, it's been a stressful year for Mr. Sambol, what with his company nearly collapsing and that stressful fire sale to Bank of America (NYSE: BAC). Not to mention being hauled before Congress to account for his part in helping facilitate the global credit crisis.

Marie Antoinette would have understood completely. "Let them take a vacation," she would have said. "An African safari would be nice. The kids will love it."

Stockholders of publicly traded companies, as well as the general public, have recently become outraged with executive compensation and their hefty bonuses, especially in light of the mounting losses at some companies. It seems that no matter what happens or what they do, executives somehow always win. They win big during their employment, and sometimes even more as they retire. With all that money, you'd think that haggling over some perks in their package would be beneath them . . . but it isn't.

The recent outrageous perk award goes to Continental Airlines (NYSE: CAL) CFO Jeffrey Misner who asked for and was granted a free lifetime parking spot at Jacksonville International Airport. As long as the 54-year-old retiree lives within 200 miles of Jacksonville Airport, and providing Continental has operations at the airport, Misner will have a free parking place. Of course, that's just a perk that goes with a $2,997,000 retirement pay.

At the beginning of the year, many were shocked to hear that Countrywide Financial Corp. -- the poster child of the subprime mortgage meltdown, which has been bought by Bank of America (NYSE: BAC) -- CEO Angelo Mozilo was going to receive a $36.4 million cash severance payments, $400,000 per year for consulting services, and perks including the use of a private airplane. He walked away from most of these after a public outcry. Don't feel bad though, he still left with at least $23.8 million.

It just doesn't cease to amaze me how some people have the nerve to ask for certain perks in addition to their very fine salaries and severance pays. Here are some more examples:

• Hanmi Financial (NASDAQ: HAFC) President and CEO Dr. Sung Won Sohn requested and got a 2005 Mercedes Benz 430S, as well as the transfer of his membership to the Wilshire Country Club and the Jonathan Club. This was in addition to his $1,298,000 lump sum retirement pay.

In the days leading up to its acquisition by Bank of America (NYSE: BAC), Countrywide Financial (NYSE: CFC) founder and chief value destroyer Angelo Mozilo is getting emotional. Business Week reports that the man whose tan makes George Hamilton look like Casper "choked up" at the company's annual meeting to approve the deal. In an emotional speech, Mozilo described his love of the organization he'd built and described his tears as a "drawback of being Italian."

Let's see: Mozilo sold hundreds of millions of dollar in stock at several times the current price, and will now walk away from battered shareholders with a bloated net worth resulting from horrific corporate governance, leaving Bank of America to deal with the shareholder lawsuits and attorneys general investigations into the company's practices.

Remember Tammy Faye's tearful interviews after her televangelist collapsed amid revelations of extramarital affairs and air-conditioned doghouses? It might not be quite as pathetic, but Mozilo is one of the few people who can give the late Ms. Faye a run for her money in the unsympathetic display of emotion department.

I somehow doubt that shareholders were moved by Mozilo's speech, which was delivered in a shareholder meeting free of a question and answer session, marked by an overwhelming security presence reflecting the number of people who hate Mr. Mozilo.

TheStreet.com's Jim Cramer says the acquired Bear Stearns portfolio is worth even less than he thought.

How bad was that Bear Stearns portfolio? I am beginning to believe that JPMorgan's (NYSE: JPM) (Cramer's Take) buy of Bear is looking like a big mistake. It can only be justified by what might have been an even bigger problem for JPM -- the collapse of the trades that Bear made, which were being processed by JPM's clearing.

We are now beginning to get a real sense of the worthlessness of the mortgage portfolios. Not that we got any help from the SEC, which has taken a "we don't care what's in the mortgages as long as you tell us you have mortgages" attitude. That's been worthless for investors, and maybe even for JPMorgan.

The losses now exceed $400 billion, according to my modeling (if you simply assumed that 50% of the exotic mortgages that were issued from 2005 to 2007 eventually went into default). That's amazing, but it looks like I dramatically underestimated the losses. UNDERESTIMATED!

The most egregious issuers of these exotic mortgages were Bear, Merrill Lynch (NYSE: MER) (Cramer's Take) and Lehman Brothers (NYSE: LEH) (Cramer's Take). I believe that JPM has taken in a huge number of uninsurable, non-hedgeable mortgage instruments that are a pure write-off. And that means they are probably underwater on everything they took in.

Almost everyone believes that Countrywide Financial (NYSE: CFC) CEO Angelo Mozilo is a thug. But, it turns out he is a smart one. Some fairly powerful people got special loans from his company. They were often people Mozilo needed as pals.

According to The Wall Street Journal (subscription required), "These borrowers, known internally as 'friends of Angelo' or FoA, include two former CEOs of Fannie Mae, the biggest buyer of Countrywide's mortgages."

Two of the people involved were James Johnson, who does some work for Barack Obama, and Franklin Raines, who had some scandal problems before he left Fannie Mae (NYSE: FNM).

Since Countrywide had business dealings with Fannie Mae, the whole deal looks a bit tawdry.

No one knows whether these loans will cause legal problems for any of the parties involved. But, it does, once again, raise the question of the wisdom of Bank of America (NYSE: BAC) buying a company with such an ugly past and so many chapters of less-than-ethical behavior.

Perhaps no one cares about the ethics part if there is money to be made.

Douglas A. McIntyre is an editor at 247wallst.com.

With Jose Canseco firmly established as the least likable foreclosure victim, Ed McMahon might be the most sympathetic of the celebrity foreclosure candidates. The Wall Street Journal reports (subscription required) that long-time Johnny Carson straight man Ed McMahon "faces the possible loss of his Beverly Hills home to a foreclosure action initiated by a unit of Countrywide Financial Corp. (NYSE: CFC)."

As of February 28th, McMahon was $644,000 in arrears on a $4.8 million loan backed by the home. The six-bedroom house has been on the market for 2 years but the recent price reduction hasn't attracted a buyer.

Just when you thought Countrywide couldn't sully its reputation any further, the company might take Ed McMahon's house. And it gets worse. According to his spokesman, the 85-year old hasn't been able to work because he broke his neck in a fall 18 months ago.

What's next? CEO Angelo Mozilo accidentally sending a rude emai to a borrower who had the nerve to contact him in search of help? Oh wait, he already did that.

Not only is Countrywide Financial (NYSE: CFC) CEO Angelo Mozilo horrifically bad at creating (or even retaining) value for shareholders, but he's also not so good at managing email.

A Countrywide customer emailed Mozilo asking the company to modify the terms on his adjustable rate mortgage. The email was sent to 16 Countrywide employees, a common practice in the current market environment.

Annoyed by the email, Mozilo did his best Marie Antoinette impersonation:

"This is unbelievable. Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the Internet. Disgusting."

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Allegiant Travel Co. (NASDAQ: ALGT) beat estimates with soaring Q1 revenues, bucking the airline trend.
• Apache Corp. (NYSE: APA) Q1 profits doubled but fell short of expectations.
• Avon Products Inc. (NYSE: AVP) posted solid Q1 results despite negative operational cash flow.
• Centex Corp. (NYSE: CTX) posted a Q4 loss well below analyst estimates.
• Cigna Corp. (NYSE: CI) profits plunged in the first quarter on litigation charges.
• Countrywide Financial Corp. (NYSE: CFC) posted another big loss, way off estimates of a small profit.
• Deutsche Bank AG (NYSE: DB) posted its first quarterly loss since 2003 on write-downs.
• Gardner Denver Inc. (NYSE: GDI) beat Q1 expectations and raised its outlook for the year.
• International Paper Co. (NYSE: IP) fell short of Wall Street's Q1 earnings estimates.
• Jacobs Engineering Group Inc. (NYSE: JEC) beat Q1 estimates and offered fully-year guidance.
• KBR Inc. (NYSE: KBR) Q1 profit more than doubled on arbitration benefit.
• MasterCard Inc. (NYSE: MA) topped analysts' expectations as Q1 profits more than doubled.
• Office Depot Inc. (NYSE: ODP) Q1 profits tumbled 55% but still beat analysts' estimates.

Analysts surveyed by Thomson Financial expect Countrywide Financial (NYSE: CFC) to post a much smaller profit for the first quarter, while Archer Daniels Midland (NYSE: ADM) is expected to report a profit gain. Both companies are scheduled to report results Tuesday morning.

Countrywide Financial is expected to earn two cents per share, which is down 97% from the same period in 2007 when it earned 72 cents per share, but that swings from a loss of 79 cents per share in the most recent quarter. However, the company tended to fall short of earnings estimates even before the credit crunch set in; that fourth-quarter loss of 79 missed estimates by 163%.

Formerly one of the top residential mortgage lenders, California-based Countrywide Financial is being bought out by Bank of America (NYSE: BAC). In the past year, Countrywide's revenues were $24 billion, and its net income is in the red to the tune of $703.5 million. Not surprisingly, the consensus recommendation of analysts remains to hold CFC.

The stock has fallen 84.9% in the past year and closed Monday at $5.83.