Bank of America Dumping Countrywide Name
Kurt Brouwer July 11th, 2008
It’s not surprising that Bank of America’s CEO is defending the acquisition of Countrywide Financial — after all, he made the decision to move forward. This LA Times piece [emphasis added] indicates that the deal cost substantially less than expected because it was a stock deal and BofA’s stocks has fallen considerably since early this year. One big negative is that the name Countrywide has become so tarnished that BofA will eventually drop it:
Countrywide Takeover Will Pay Off BofA’s CEO Says (Los Angeles Times, July 10, 2008, E. Scott Reckard)
Bank of America Chief Executive Ken Lewis defended his takeover of Countrywide Financial Corp., saying Wednesday that the Calabasas lender “kind of went into a shell and didn’t say much about what they were doing right” when the mortgage business hit the skids last year.
But Bank of America still plans to dump the Countrywide name early next year in favor of the Bank of America brand, Lewis confirmed.
Often cast as having epitomized the lax lending standards that buried millions of Americans in unaffordable loans, Countrywide, the nation’s largest mortgage lender, was on the ropes when Bank of America agreed to buy it six months ago.
But in an interview with Los Angeles Times reporters and editors, Lewis said Countrywide had been painted with too broad a brush, and he promised to do a better job of defending it than its co-founder and chief executive, Angelo R. Mozilo, had done.
“There’s always another side to any story, and we’re going to tell it,” Lewis said, praising Countrywide’s efforts to avert foreclosures, which he credited for helping almost 100,000 borrowers remain in their homes this year.
“We don’t think in every instance that Countrywide was the bad guy,” Lewis said.
On a weeklong California trip that included a Town Hall Los Angeles luncheon address Wednesday, Lewis acknowledged that loan losses at Countrywide were at the high end of estimates that Bank of America projected in January.
But he said Bank of America paid so little for the lender that once the books on the deal were closed, the Countrywide operation would immediately show a profit — with the potential for huge growth in income when the mortgage industry recovers.
Charlotte, N.C.-based Bank of America bought Countrywide for stock that was worth $4 billion when the deal was announced in January but only $2.5 billion by the time the deal closed July 1...
See our earlier post on this, Bank of America Snaps Up Countrywide.
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