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Would You Buy Countrywide?

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We've been talking to our sources at Bank of America (a rapidly dwindling pool of investment bankers who have begun to carry their resumes with them at all times), trying to figure out what the business rationale for buying Countrywide might be. The best answer we've heard is that the deal reduces Countrywide's cost of funding. As a stand alone entity, Countrywide's borrowing costs had grown so high that it was going to be teetering on the verge of insolvency. But as a part of the ginormous BofA, it will be able to greatly reduce those costs to the extent that its business can be very profitable even in the short term.
Felix Salmon over at Portfolio talks to the sources inside his head and comes to a very different conclusion. Salmon thinks it is about Lewis's plan to concentrate on retail banking and get out of investment banking. "Bank of America has now, overnight, become by far the biggest and strongest and most important operator in the world of US mortgages. Over the long term, that status is going to be hugely valuable for Lewis, even if he has to take some write-downs along the way," he writes. "Finally, the Countrywide acquisition solidifies BofA's status as a consumer bank, and helps Lewis's decision to move slowly out of the investment-banking business look strategic."
Our political friends are already crying bailout. They expect there to be some sort of liability limiting move from Washington, DC as part of this deal. The conspiratorial minded set also believe that this confirms that Countrywide really was as close to bankruptcy as many thought yesterday.
But we first learned of this deal from our commenters, who tend to be our best sources for scoops and analysis. So don't let us tell you what to think on this. Let's do it the other way. Tell us what's going on. Why is BofA so hot to buy Countrywide? And would you buy Countrywide if you were Ken Lewis?
Update:Herb Greenberg says the Fed is engineering this deal and that the government will likely provide Bank of America with guarantees limiting the losses. He also quotes Jon Najarian of, on the very, very suspicious options activity prior to the news of this deal breaking.

To say there was HUGE unusual activity in Countrywide Financial ahead of today’s news that Bank America was close to finalizing a deal to buy the troubled mortgage giant would be as surprising as seeing Dennis Kucinich end his presidential run! We show over 304,000 calls traded against 248,000 puts, but the interesting thing here is that the bulk, some 76 percent of these calls were bought before the announcement! To us this means the likelihood of someone being tipped off was quite high. Like Burj Dubai Tower high!

Why BofA Bought Countrywide
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