Do The Countrywide (CFC) Bond-Holders Take Bank Of America (BAC) To Court?

As far as anyone knows, Bank of America (BAC) is buying Countrywide Financial (CFC). The CFC stock price would indicate that the market has its doubts about whether the deal will close.

The groups really sweating the deal are the Countrywide bond-holders. According to The Wall Street Journal, Bank of America "has given few details about what will happen to about $25 billion in Countrywide bonds as part of the deal." The question becomes whether BAC can dodge the obligation Countrywide has to the debt-holders.

Bank of America says that Countrywide is a "separate legal entity". That may be true, but it is less so, or not so, once it has been bought.

Bank of America may use the technicality about "separate" to stiff bond-holders. That is likely to end up in court.

Douglas A. McIntyre