Posted on 08/24/2007 11:03:29 AM PDT by Hydroshock
Countrywide CEO: Mortgage Crisis Persists Despite BofA Stake Topics:Subprime Lending | Mergers & Acquisitions | Banking | Mortgages Companies:Lehman Brothers Holdings Inc | Countrywide Financial Corp | Bank of America CorpBy CNBC.com | 23 Aug 2007 | 01:31 PM ET Font size: The chief executive of Countrywide Financial told CNBC that Bank of America's $2 billion investment in the struggling mortgage lender was a "priceless endorsement" for Countrywide but said the crisis in the housing and mortgage markets isn't getting any better.
"It's a great endorsement of Countrywide," CEO Angelo Mozilo told Maria Bartiromo in an exclusive interview. "It's important from our viewpoint that somebody of that caliber to give us the vote of confidence that was needed in this environment when everybody was in a panic and things were being said about Countrywide which weren't true."
But at the same time, the chief of the largest U.S. mortgage lender remains cautious towards the current state of the industry.
"This environment is certainly not getting better," he said. "Something tomorrow could turn it around, but this is a first step in series of steps we're going to take."
Bank of America announced late Wednesday it would invest $2 billion in Countrywide Financial, helping shore up the company's finances as it has struggled with a liquidity crunch this month.
(Excerpt) Read more at cnbc.com ...
Hurry up BofA...
you need to save all your illegal-immigrant customers that got
home loans from Countrywide!
I pray that some MAJOR BofA shareholders will throw a LOUD fit
at the next shareholder meeting.
For the PERFIDIOUS work of BofA to give legitimacy to illegals via
offering of banking services.
And those will get paid off, closed out, or consolidated through a different lender, when the time is right.
Well, since B of A caters to illegals, and Countrywide does mostly B and C credit loans, it is no surprise that they are shackin up.
Bad credit loans are going belly up, and so are the companies who made their money off of them. Big deal.
Regular mortgage companies are just fine.
There’s nothing at all altruistic about BAC’s move here, IMHO.
They bought a ton of 7.25%-yielding preferred stock.
They probably shorted the bloody daylights out of CFC common as a hedge, and if they did so when CFC was 25 the other day, they already have a 15% 3-day return, was 20% earlier today w/CFC @ 20.high. This is a very common configuration for bondholders in a company. If the co. goes BK, the short bet pays off. Meanwhile, BAC collects 7.25% from CFC. Whatever happens to CFC, BAC will have an ongoing strangle (by that I mean, both a long and short position they can trade partially in and out of) and they get paid 7.25% to maintain. Not bad.
Should CFC go belly up, not only will BAC’s senior position in the preferred give them a serious equity foot in the door wrt a possible takeover, but the gain from shorting the common (which goes to zero in BK) pay for it.
I have no particular love for either company, but it’s a screaming brilliant move on the part of BAC.
Saw this interview yesterday on CNBC. BTW, my dealings with Bank of America last year was a nightmare.
THAT conversion feature was nullified the other day; I think it was rumored to be so when the orig news came out, but the SEC came out with a ruling against convertability and BAC pledged to not attempt to convert. I don’t imagine BAC would want to trade out of their senior position for common stock. (Which yields ~~3% btw)
>> They probably shorted the bloody daylights out of CFC common as a hedge... This is a very common configuration for bondholders in a company.
I get the advantages of this strategy if the shorted company goes bankrupt or its common stock significantly declines in value.
But what happens if it goes the other way... if the bondholder’s investment turns the other company around? When & how do they cover the short?
7.5% interest on the investment. Countrywide is going under. Too much overhead and too little business. The CEO has been exercising his stock options and selling them a few days later more than two times per week, so he's not very confident. Look for CFC to go bankrupt and for BoA to buy the assets they want at the BK auction.
Mozilo’s been exercising options and bailing as fast as he can. It’s been going on for months.
Follow the money, if he was confident of a turn around he would be buying now.
A certain amount is reasonable for diversity purposes is wise, but he has been doing an awful lot of it lately. He obviously knows CFC is going down. He has also been very careful not to overstate the future prospects of CFC. Probably getting very good legal advice in an effort to thwart any potential lawsuits against himself.
I've seen two interviews, and I think that statement is absurd.
See post 12, it seems he is saling his stock in the company.
I don’t see any link to any data so the readers can judge for himself.
Maybe you are right, maybe not, but I do remember Ken lay was saying all was fine as he he was dumping his stock just before Enron tanked. I would be interested in seeing if he is buying, selling, or standing pat. That would be very telling.
Yup. That's why Bank of America just bought a piece of them, giving them first dibs on buying the whole thing.
So you don’t have any data to back up the claim, but made it anyway.
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