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Why Bank of America will never close the deal to buy con artist Angelo Mozilo's Countrywide
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This Link is located in the Public Channel Housing Bubble and Bear Links.
Posted by ian 1 year 317 days ago (us1.institutionalriskanalytics.com). Views: 81
Tags: housing bubble countrywide angelo mozilo |
| Related Tags: credit crisis gold wall street peter schiff economics inflation banks |
Simply stated, honesty plays little part in American business. Our morality, on the contrary, in a game of cards or in sports is irreproachable. And so it is that we are gentlemen of honor when engaged in life's pastimes, but devoid of it when engaged in serious pursuits. The public has a subconscious awareness of this state of business immorality, but for some reason remains apathetic to it, and even condones it. True, a simple criminal act is condemned (and when simple it is invariably of small dimensions) but where large profits have accrued or an enormous institution erected on no matter how fraudulent a foundation we give it respect and applause. "He was clever enough to get away with it" implies only approval. Perhaps because of the size and ramification of business, the citizen rests his confidence in the law; but the law has failed him.
False Security: The Betrayal of the American Investor
Bernard J. Reis & John Flynn
The Stratford Press (1937)
Last week, we described how a Bank of America (NYSE:BAC) acquisition of Countrywide Financial (NYSE:CFC) might go forward -- if BAC was willing to endure uncertainty with respect to CFC's current and unliquidated liabilities.
Now we look at the other prospect - namely a busted deal, a regulatory intervention and the sale of the bank sub by the FDIC as or after CFC enters bankruptcy. We note with some satisfaction that on Friday S&P, a unit of McGraw Hill (NYSE:MHP), took notice of the disclosure by BAC regarding CFC, disclosure that we and Bloomberg News illustrated earlier last week, and downgraded CFC.
Could it be that the torpor affecting some analysts, inertia which allowed them to believe that ratings for CFC actually would converge with those of BAC, has now ended? Did S&P and the rest of the ratings herd really believe a company facing hundreds of federal fraud, racketeering, truth-in-lending and other claims could be bought this side of a restructuring?
We don't believe that the BAC+CFC transaction can get done without a re-organization to address the litigation and other off-balance sheet, contigent claims. Are terms like loan rescission or punitive damages at all meaningful? Indeed, if a sale to BAC is not assured, we wonder if a Chapter 7 filing by bond holders is not now the logical course.
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ian said |
| 1 year 317 days ago |
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