Bank of America has agreed to buy the battered mortgage lender Countrywide for 2.7 billion euros. Countrywide has suffered huge losses and defaults, a loss of access to credit markets, and a slew of lawsuits and regulatory probes into its lending practices.
It is a big further gamble for Bank of America which back in August invested one point three billion euros in Countrywide. More than half of that money is now lost. Bank of America Chief Executive Kenneth Lewis acknowledged “near-term challenges” but called it a “one-time opportunity” to buy at a very attractive value.
Combined Bank of America and Countrywide would hold almost a quarter of all the mortgage loans in the US. Some analysts questioned the wisdom of the deal and wondered if the bank was throwing good money after bad.