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.

Continue reading SEC charges former Countrywide CEO Mozilo with fraud and insider trading

SEC charges former Countrywide CEO Mozilo with fraud and insider trading originally appeared on BloggingStocks on Fri, 05 Jun 2009 08:40:00 EST. Please see our terms for use of feeds.

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. "

Continue reading Ken Lewis defends acquisitions of Merrill Lynch, Countrywide

Ken Lewis defends acquisitions of Merrill Lynch, Countrywide originally appeared on BloggingStocks on Sun, 15 Feb 2009 14:40:00 EST. Please see our terms for use of feeds.

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

Bank of America (BAC) heads back to government for cash originally appeared on BloggingStocks on Thu, 15 Jan 2009 04:13:00 EST. Please see our terms for use of feeds.

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.

Continue reading Cheap Stocks: Goldman Sachs Group

Cheap Stocks: Goldman Sachs Group originally appeared on BloggingStocks on Mon, 08 Dec 2008 18:10:00 EST. Please see our terms for use of feeds.

Bank of America blows billions on Countrywide litigation originally appeared on BloggingStocks on Mon, 06 Oct 2008 08:58:00 EST. Please see our terms for use of feeds.

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.

Is Bank of America too big? originally appeared on BloggingStocks on Tue, 16 Sep 2008 11:58:00 EST. Please see our terms for use of feeds.

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."

Continue reading Let them eat cake: Ex-Countrywide exec takes family on African Vacation ... on Countrywide's jet

Let them eat cake: Ex-Countrywide exec takes family on African Vacation ... on Countrywide's jet originally appeared on BloggingStocks on Sun, 03 Aug 2008 11:40:00 EST. Please see our terms for use of feeds.

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.

Continue reading Outrageous executive severance perks - talk about chutzpah!

Outrageous executive severance perks - talk about chutzpah! originally appeared on BloggingStocks on Tue, 22 Jul 2008 13:46:00 EST. Please see our terms for use of feeds.

Countrywide CEO Angelo Mozilo gets emotional -- the male Tammy Faye? originally appeared on BloggingStocks on Mon, 30 Jun 2008 18:03:00 EST. Please see our terms for use of feeds.

Continue reading Cramer on BloggingStocks: JP Morgan made a huge mistake

Cramer on BloggingStocks: JP Morgan made a huge mistake originally appeared on BloggingStocks on Fri, 20 Jun 2008 08:57:00 EST. Please see our terms for use of feeds.

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.

Countrywide chief gave out special mortages originally appeared on BloggingStocks on Sat, 07 Jun 2008 13:40:00 EST. Please see our terms for use of feeds.

Ed McMahon faces Countrywide foreclosure originally appeared on BloggingStocks on Wed, 04 Jun 2008 11:08:00 EST. Please see our terms for use of feeds.

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."

Continue reading Countrywide's Mozlio is as bad with email as he is with shareholder value

Countrywide's Mozlio is as bad with email as he is with shareholder value originally appeared on BloggingStocks on Wed, 21 May 2008 14:26:00 EST. Please see our terms for use of feeds.

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.

Continue reading Earnings highlights: Countrywide, Visa, MasterCard, KBR, Office Depot and others

Earnings highlights: Countrywide, Visa, MasterCard, KBR, Office Depot and others originally appeared on BloggingStocks on Sat, 03 May 2008 15:40:00 EST. Please see our terms for use of feeds.

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.

Continue reading Countrywide's Q1 profit expected to tumble, ADM's to rise

Countrywide's Q1 profit expected to tumble, ADM's to rise originally appeared on BloggingStocks on Mon, 28 Apr 2008 18:15:00 EST. Please see our terms for use of feeds.

Countrywide CEO Angelo Mozilo took home $10.8 million for 2007 originally appeared on BloggingStocks on Fri, 25 Apr 2008 13:16:00 EST. Please see our terms for use of feeds.

• Mattel (NYSE:MAT) to report Q1 earnings; conference call at 8:30am.
• Halliburton (NYSE:HAL) reports Q1 earnings; conference call at 9:00am.
• Bank of America (NYSE:BAC) to report Q1 earnings; conference call at 9:30am.
• Toronto-Dominion (NYSE:TD) t o hold conference call about the acquisition of Commerce Bancorp (CBH) at 11:00am.

• Wyeth (NYSE:WYE) to report Q1 earnings; conference call at 8:00am.
• The Federal Reserve to host a meeting regarding the Countrywide Financial (NYSE:CFC) takeover by Bank of America at 9:30am.
• AT&T (NYSE:T) to report Q1 earnings; conference call at 10:00am.
• Lockheed Martin (NYSE:LMT) to report Q1 earnings; conference call at 11:00am.
• Yahoo (NASDAQ:YHOO) to report Q1 earnings; conference call at 5:00pm.

• Biovail (NYSE:BVF) PDUFA date for NDA of BVF-033 for the treatment of depression.
• UPS (NYSE:UPS) to report quarterly earnings; conference call at 8:30am.
• General Motors (NYSE:) to hold conference call on 1Q08 global sales at 9:00am.
• Delta (NYSE:DAL) to report Q1 earnings; conference call at 10:00am.
• Amazon.com (NASDAQ:AMZN) to report Q1 earnings; conference call at 5:00pm.

• Hershey (NYSE:HSY) to report Q1 earnings; conference call at 8:30am.
• Microsoft (NASDAQ:MSFT) to report Q3 earnings; conference call at 5:30pm.

• Wendy's (NYSE:WEN) to report Q1 earnings; conference call at 9:00am.

Market highlights for next week: HAL, T, LMT and MSFT reporting earnings originally appeared on BloggingStocks on Fri, 18 Apr 2008 15:31:00 EST. Please see our terms for use of feeds.

Countrywide (NYSE: CFC) CEO Angelo Mozilo, perhaps the most reviled executive in corporate America, will get $10 million as part of a Bank of America (NYSE: BAC) takeover of the mortgage broker. Investors and members of Congress are incensed. The "bonus" is described in SEC filing as "performance based." Countrywide shares are down from $42.24 to $5.63 over the past year.

One powerful senator may go after the payment. "It's perverse for Bank of America to reward the principal architects of the bad business practices that caused this housing crisis,'' said Sen. Charles Schumer, D-NY, said in a statement, according to the AP. Perhaps shareholders will get lucky and Schumer will fight the pay-out of the money.

It is a shame that Bank of America would hurt its own reputation by doing this. Countrywide was available for sale because it was in such deep trouble. BAC did not need to "pay off" Mozilo to get a deal done.

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

Countrywide CEO to get $10 milion on way out originally appeared on BloggingStocks on Sun, 30 Mar 2008 13:10:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• Wachovia upgraded Countrywide (NYSE: CFC) to Market Perform from Underperform, as they do not expect any other bidders to emerge and for the acquisition by Bank of America (NYSE: BAC) to close.
  
• HSBC upgraded AstraZeneca (NYSE: AZN) to Overweight from Neutral on valuation and their belief that an agreement with Ranbaxy on Nexium is possible.
  
• Massey Energy (NYSE: MEE) and International Coal (NYSE: ICO) were upgraded to Neutral from Underweight at JP Morgan citing higher coal price forecasts.

• UBS raised Helicos BioSciences (NASDAQ: HLCS) to Neutral from Sell.
  
• RBC Capital raised National City (NYSE: NCC) to Sector Perform from Underperform.
  
• Merrill upgraded Magellan Midstream Holdings (NYSE: MGG) to Buy from Neutral.

Analyst upgrades: Countrywide Financial, AstraZeneca, Massey Energy, International Coal originally appeared on BloggingStocks on Wed, 19 Mar 2008 11:23:00 EST. Please see our terms for use of feeds.

The FBI is probing whether Countrywide Financial (NYSE: CFC) committed securities fraud by making false statements about the mortgage bank's deteriorating financial position.

The Wall Street Journal (subscription required) reports that a "potential issue facing the company is whether it has been candid in its accounting for losses. People familiar with the matter said that Countrywide's losses may be several times greater than it has disclosed."

Aside from the potential civil and criminal issues at stake, the investigation could kill the takeover of Countrywide by Bank of America (NYSE: BAC). It is not clear whether the mortgage company can make it as an independent operation if the big bank withdraws it offer. If auditors and the government determine that CFC losses are much greater than represented, it might drive the mortgage firm into insolvency.

The Bank of America deal is probably the only way that Countrywide shareholders can get any money for their shares. The company's stock has dropped from a 52-week high of $42.24 to just above $5, which is not much above its 52-week low.

The news reports of the FBI probe is likely to push shares lower. If new, significant losses have to be reported, the price of CFC's stock may go to zero.

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

FBI examines Countrywide Financial statements originally appeared on BloggingStocks on Sat, 08 Mar 2008 12:10:00 EST. Please see our terms for use of feeds.