Countrywide Aint My Brother He’s Heavy
April 30, 2008 – 7:51 amBank of America is feeling the weight of of the Countrywide burden. The mortgage lender that Bank of America Corp. plans to buy, reported a first quarter net loss of $893 million. It is not the $893 million putting a crimp in Bank of America style, but the resulting $40 billion of renegotiated home loans it now has to deal with.
Bank of America Corp said on Monday that, as part of its acquisition of Countrywide Financial Corp., it expects to modify at least $40 billion in mortgage loans to help homeowners.
The second-largest U.S. bank unveiled its plan at a public hearing on the $4 billion merger at the Federal Reserve Bank in Los Angeles, near where Countrywide is based.
It is probably not coincidental that Bank of America went out and raised a little spare change yesterday either.
Bank of America Corp on Tuesday sold $6 billion in debt in a two-part sale, according to International Financing Review.
Is six billion enough? Well think about those $40 billion in troubled mortgages the bank expects to modify, all of them troubled and less than prime. Bank of America may as well build a bonfire with the $40 billion. If that’s what the capital raising is for, then they are only $34 billion short.
One Response to “Countrywide Aint My Brother He’s Heavy”
One of Countrywide’s first operations center was a two building complex on a high hilltop overlooking Simi Valley, California.
The previous owner of that property was Gibraltar Savings, shut down by the feds in the savings and loan crisis. Gibraltar had bought the property from an overextended computer company.
The computer company failed shortly after moving out of the property. The computer company had been induced to buy the property by an overzealous city manager, who had the hilltop declared a “redevelopment area” to attract jobs to the area.
Neither the computer company nor Gibraltar knew that the hilltop operations center with the beautiful view had been built on top of a Chumash Indian burial ground. The city manager did know that fact when he induced the now failed computer company to build the first building on the burial ground. Gibraltar’s management had been scared by Chumash elders who showed up when the land grading equipment first started moving more graves for the second building.
By the time Countrywide bought the property, that fact that it was built on an Indian burial ground was widely known.
So now the consequences of disrespecting an Indian burial ground have affected Countrywide.
Perhaps Bank of America is next.
By Aristotle on May 2, 2008