B of A gets Countrywide

The $4 billion all-stock deal announced this morning puts an end to the daily soap opera starring the nation's largest originator of home loans. In some ways, Bank of America is getting a great deal – the sale price amounts to $7.16 a share, which compares with a year ago when Calabasas-based Countrywide was trading in the $40s. But the stock price is at bargain-basement levels for a reason, and now the bank company inherits Countrywide's still-unfolding financial mess. It's way too early to know about layoffs and branch closings, other than to figure they'll be a lot of them. There also are some regulatory hurdles to get past. One thing the two companies did announce: No more subprime loans (good idea). Here's some backstory from the WSJ:

A failure of Countrywide would have posed a major risk to the U.S. economy, since the lender services about one of every six loans in the country. Bankruptcy likely would have shifted huge financial risk to Fannie Mae and Freddie Mac. A spokesman for the U.S. Treasury Department said agency officials didn't encourage Bank of America to rescue the huge mortgage firm. The acquisition marks the end of a mortgage lender long known as an innovator, survivor of slumps and fierce competitor that rocketed to No. 1 in U.S. mortgage lending by the early 1990s. Countrywide lost its No. 1 position in the mid-1990s but regained it in 2004 and continued expanding its market share by hiring aggressive sales people and lowering its lending standards -- leading recently to a rising tide of defaults.

Here are updated stories from the NYT and FT.