Bank in 2008, Bank of America purchased the ailing Countrywide Financial. This acquisition has turned out to be poisoned pill for BofA, in spite of former CEO Ken Lewis’ optimistic comment at the time of the purchase:
“Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation’s premier lender to consumers,” Lewis said in a statement.
MSNBC said at the time:
It also places Lewis in the position of a market savior. By buying Countrywide, he’s keeping the industry and regulators from the messy task of figuring out who would take on the responsibility of collecting payments for the 9 million U.S. home loans serviced by the Calabasas, Calif.-based lender.
One mess may have been averted, but since then, BofA has faced a series of legal woes. Countrywide’s lending indiscretions have become almost legendary, and BofA is now paying the price. Rather than dying a death by a “thousand pin pricks”, BofA agreed to pay a $335M settlement, the largest of its kind, because of Countrywide’s discriminatory lending practices. This will not be the end of this, however:
(Reuters) – A week after settling a landmark federal discrimination case, Bank of America Corp’s Countrywide unit was ordered to face a lawsuit by a Hispanic couple who said it applied excessive pressure to refinance their home on terms they did not accept and could not afford.
In an opinion by a prominent Republican-appointed judge, the 9th U.S. Circuit Court of Appeals in Pasadena, California said a lower court was wrong to dismiss the complaint by Victor and Belen Balderas, who claimed they could not read the English language loan documents they signed.
The Countrywide soap opera has been playing out since 2007. [Below is a 2007 interview with Mozilo where he discusses the "unwarranted panic" and how Countrywide is "solid".] Don’t expect to see the final nail in Countrywide’s coffin for awhile. We’ll have the “Ghost of Subprime Past” with us for years.
[Thanks L!]
Bubble Meter
Mish's Global Economic Analysis
Ohio Fraudclosure
Northern Virginia Housing Bubble Fallout
UK House Bubble
Breaking News Relevant Articles© Copyright 2012 Housing Doom | Copyright© 2011, AuthentiCraft, Inc.
If I recall correctly…Lewis was taken to the back room and told (by the FED) BOA would buy the MESS!!!
Gooooober-
I don’t know that we “officially” know that the Fed twisted Lewis’ arm, but that was the general assumption. (Mine included.) Why else would they make such a major acquisition with so little due diligence?
I must say though, I’m asking myself now why the government would be leaving BofA holding the bag if that were the case. If indeed the Fed strong-armed BofA back in 2007, why aren’t they screaming from the housetops, “The Fed made us buy this boondoggle- sue them!”