"This is now becoming a liquidity crisis, an unnecessary one," Mozilo told CNBC television. "There's been a rush to judgment, an overreaction, a baby out with the bathwater. There's no question about it." Mozilo said the winnowing of competitors will be "great" for Countrywide, the largest U.S. mortgage lender, which might pick up market share.
Posts filed under Finance
Unimaginable Headlines In Today's Papers
Merrill Seen Suffering $15 Billion Investment Loss: Report
Countrywide Seeks Rescue Deal
Of course by now everyone is starting to adjust but if you can mentally transport yourself back to the go-go days of 2005-2006 and told someone that Countrywide would be teetering on bankruptcy in two years, you would be laughed into the business mental asylum.
BOA and Countrywide - Oh, I bet the Feds will let this slide...
On potential obstacle to the deal is a Federal law which prohibits a bank-holding company from controlling more than 10% of U.S. deposits after acquiring another bank.
But the law includes an obscure caveat: The 10% limit doesn't apply to federally chartered thrifts, meaning a bank-holding company may control more than 10% of deposits in the U.S. following a thrift acquisition. Since a Countrywide subsidiary called Countrywide Bank is a federally insured thrift, that may give Bank of America room to maneuver around the deposit cap.
Bank of America is the only bank that has ever neared the 10% deposit cap. Many seasoned banking attorneys were not familiar with the caveat, as no bank has ever tried to acquire a thrift to vault above the 10% limit.
No doubt the Federal Reserve was a behind the scenes supporter of this transaction. A collapse of Countrywide with a $1.5 trillion dollar servicing portfolio would have been a disaster.
Todays Best Links
Exciting Commercial Real Estate Bust on the way in London (Economist)
Yet, with the impeccably bad timing the industry is known for, construction boomed just as the market was peaking.
I think this is one of those that are almost tautological. Given how human psychology seems to work it appears to be inevitable.
Awesome graphic: Inflation adjusted price of gold for 400 years (Daily Telegraph via Kedrosky)
Parade Magazine and Supply Chains (Evolving Excellence)
Moodys: We can never track risk again (Reuters)
Oh, now you tell us.