Friday, June 06, 2008

Bank of America Gets Permission from Fed Reserve To Acquire Countrywide

Bank of America (BAC) has finally received approval from the Board of Governors of the Federal Reserve to acquire Countrywide (CFC). Investors do not know whether to laugh or cry over that one. As the sub-prime mortgage debacle got worse the initial rationale that Bank of America used began to look weaker. The acquisition still has to be approved by Countrywide shareholders.

In a short press release this comment was attributed to the chairman and CEO Kenneth D Lewis “This transaction represents a rare opportunity for Bank of America to significantly gain market share in the mortgage business, allowing it to expand in a cornerstone financial product,"

The buy in that is now required to accept this transaction is a very strategic approach where the very long term synergies if they develop outweigh the financial pain that is being currently experienced. The dice are still rolling on this one and will continue rolling for quite some time.