Consumer Law

Groups to Congress: Make BofA clean up Countrywide

By Alan White

In a February 1 letter, four community development and advocacy groups have called on Congress to hold hearings on the BankofAmerica acquisition of Countrywide, a merger that will make BofA the nation's largest mortgage lender and servicer. The groups want Congress to determine whether BofA will devote adequate resources to foreclosure prevention and loan modifications, given BofA's past record of following acquisitions with layoffs.

The groups also call attention to the fact that after the merger BofA will have more than 10% of all bank deposits nationwide, which could violate federal law. BofA says there is a loophole, and that deposits held by federally-chartered thrifts like Countrywide FSB don't count towards the 10% concentration cap. For banking law geeks, this is a question governed by 12 USC 1842 and the definitions in 12 USC 1841.

Meanwhile a hedge fund wants to block the merger on the grounds that the $8 per share offered by BofA to Countrywide shareholders is too low (?). Countrywide Financial (CFC) has been trading between $6.00 and $7.50 in the last few days.

Full post as published by CL&P Blog on February 02, 2008 (boomark / email).