Bank of America agrees to pour $2 billion into Countrywide Financial Corp
Filed under: Business, News | By: Roy
Posted on: August 26, 2007 | 1 Comment
Countrywide Financial has been in a great deal of trouble recently, due to the crisis in the sub prime mortgage market which stemmed from the credit crunch.
However, The Bank of America has agreed to help Countrywide Financial by giving the company a massive $2 billion in an attempt to calm the fear in the mortgage market.
The Bank of American holds roughly $1.5 trillion in assets and it is the largest retail bank in america. This cash injected comes only a week after Countrywide Financial managed to get $11.5 billion in credit funding to continue its operations.
Angelo Mozilo is the Chairman and CEO of Countrywide Financial and he said:
“Bank of America’s investment in Countrywide represents a vote of confidence and strengthens our balance sheet, enabling us to position Countrywide for future growth and success,”
“This transaction benefits all of Countrywide’s constituents, including investors, shareholders, mortgage customers, deposit holders, business partners and employees.”
The Chairman and CEO of The Bank of America, Kenneth D. Lewis, responded with:
“This investment reflects our confidence in their business and recognizes the importance of the company in providing home financing across the country. We hope this investment will be a step toward a return to a more normal liquidity in the mortgage markets,”
Do you think this cash injection from The Bank of American will save Countrywide Financial?
If not, will more funding be needed or is Countrywide Financial going to go bankrupt whatever happens?
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I for one certainly hope the B of A investment helps Countrywide succeed. I know that Countrywide has helped many people buy a home when they would otherwise not be able to. Also Countrywide did not become the largest Mortgage Company without knowing what they were doing. Now if most of the people they have helped would fulfill their end of the bargain and pay their mortgage it would help everyone. One thing I know that no one seems to be reporting is Countrywide froze several ARMS for five years. So people can get their credit in shape in preparation for another refinance before the five year ARM starts.