Mortgage rumor: Bank America to buy Countrywide
From the "you know this had to happen file", Bank America is rumored to be close to buying troubled mortgage giant Countrywide. BofA loaned Countrywide $2B last summer and retained a right to buy the company.
With Countrywide's stock down to practically nothing ($5.12) but jumping over 60% to $8.25 on the news (rumor), I think it's quite possible a deal will happen and it would give Bank of America the leading franchise in the mortgage industry. Since all loans are not going to become delinquent and every home in America will not be foreclosed, BofA should do very well once the mortgage mess gets straightened out.
Lest we forget, there is a business cycle, recessions are a healthy and normal disruption necessary to sustain longer term growth. Weak players and bad decisions are shaken out, the markets repair themselves and lessons are learned. Savvy investors know that opportunities always present themselves in troubling times and Bank of America is a well run operation.
Friday, January 11 UPDATE: Bank of America has agreed to buy Countrywide for $4 Billion.