Bank of America to Buy Out Countrywide?
Apparently Bank of America (BAC) might bail out buy out Countrywide Financial (CFC).
Countrywide stock responded positively soaring over 60% from about $5.50 before the news to nearly $9 after the news. In live trading CFC is sitting at $8.20 up 60% on today’s session. Bank of America stock hasn’t made much movement, but the 2nd-largest US Bank is up 2.4% on the day.
Check out this intraday look at CFC stock, notice the large projection of the price of the stock,
CFC Intraday Chart, Click to View
Along Countrywide stock, Washington Mutual (WM) has shot up on the news as well which is most likely because of the probability that they may be bought out in the near term future too. WM stock is sitting at about $14.60, up over 18% on the day with a intraday high as of now of $14.92.
I also wrote about this rumor on my blog tonight:
http://www.growyourfunds.com/2008/01/bank_of_america_to_buy_country_1.html
I wonder as some analysts do, is this BofA’s way of acknowledging a mistake in its earlier investment timing and doubling down, or just strategy for the future?
perhaps a bit of both?
Maybe a little of both – I don’t think anyone knew when subprime would blow over. But BofA knew they needed to stake some sort of claim at the time to prevent others from stepping in and buying Countrywide. Also, because one of Countrywide’s subsidiaries is a thrift bank, BofA may get around the 10% cap the government places on ownership of US deposits.
Looks like it’s a done deal as of this morning – BofA will shell out 4 billion for CFC:
http://biz.yahoo.com/ap/080111/countrywide.html
wow that is crazy.. but it was bound to happen eventually (at least i thought so). bank of American wasn’t about to let their money go to waste
That is wierd because last year CW borrowed BOA money.