Countrywide (CFC) may be in alliance talks with Bank of America (BAC), at least that is what the Financial Times has everyone scrambling about late on a Friday in earnings season. CNBC and other media networks are reporting the same, but they are all sourcing Financial Times so they don’t have to take the blame in case this turns out to be false.
Think about this for a moment. This would be a sneaky way for Bank of America to get around this deposit ceiling that the Federal Reserve imposes on banks not being able to acquire up to more than 10% of bank depoits in the US. Be sure to remember one thing, most employees HATE alliances. In a merger they don’t have a choice because they will be fired if they are blocking the deals. In an alliance they can keep doing little back-stabs so they don’t have to make any changes or adaptations and they can undermine the other party. If Bank of America, or ‘Banco-Vamerica’ as the greeter at my old branch would say, does this it would change things drastically in banking. They should really just go buy a huge mortgage player if they want to do this, but they need to do it where the deposit base isn’t an issue.
Countrywide (CFC) is up 10% at over $44.00 on this. That’s actually a new 52-week high, so who there thinks the mortgage market stocks is as bad as they say? Indymac (NDE) and Washington Mutual (WM) are also ones to think about if this really happens. Maybe even a New Century (NEW) would benefit.
Jon C. Ogg
January 26, 2007
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