West_S

BofA's Countrywide Purchase is a Huge Mistake

The reason BAC bought CFC is primarily due to the legal limitation that prohibits any one financial institution from controlling/holding more than 10% of deposits in the USA. BAC is priming itself for additional deposit growth through CFC's Countrywide Bank, which holds a thrift charter, and is not subject to the 10% deposit share max imposed on commercial banks. BAC is buying a well-established, high-profile (high brand recognition among consumers) mortgage origination network that allows them to leapfrog to the front of the retail lending arena in the USA, and is positioning itself well for the next economic upturn. BAC is getting this mortgage origination network for SIGNIFICANTLY less than it could have built it from the ground up itself. There might still be pain in the short run in this acquisition, but apparently BAC analysts and their investment banking advisors see long-term value in the acquisition.