Banking Law

In the midst of the rumors about Countrywide Financial Corp.'s financial condition over the past few days, some readers have sent me links to blog posts that could be read as allegations that Countrywide Bank, the thrift subsidiary of Countrywide Financial Corp., was in precarious financial condition and that urge depositors, even insured depositors, to withdraw their deposits from the thrift. Countrywide has denied the rumors as to the holding company, but I'm not aware that it has addressed any issues with respect to Countrywide Bank.

I'd be cautious about spreading false rumors about the bank, at least in Texas. We have a statute here, Section 59.202 of the Texas Finance Code, that evidences a dim view of such false statements.

§ 59.002. SLANDER OR LIBEL OF BANK.  (a) A person commits 
an offense if the person:
(1)  knowingly makes, circulates, or transmits to 
another person an untrue statement that is derogatory to the 
financial condition of a bank located in this state;  or
(2)  with intent to injure a bank located in this state, 
counsels, aids, procures, or induces another person to 
knowingly make, circulate, or transmit to another person 
an untrue statement that is derogatory to the financial 
condition of any bank located in this state.
(b)  An offense under this section is a state jail felony.

That's right, a "jail felony." Plus, a couple of Texas Rangers named Gus and Call will personally kick your backside.

The Internet is full of white noise, as any reader of this blog will certainly attest. However, some of that white noise can  get you in unplanned for trouble.

If Bank of America rides to the rescue, then all will be well, and the white noise will fade to black. I thought that Bank of America's move in August to inject funds into Countrywide was a good deal for Bank of America, and I still think that it's a good deal, notwithstanding the fact that Countrywide's financial condition has deteriorated since then.  I guess we'll know soon whether or the deal will "make."

UPDATE: That didn't take long.