The Sluce

Buying Countrywide Ahead of Today's Fed Action

William, you sound like you may be in a bad loan yourself. Although there were some deceptive practices by some lenders and probably more individual brokers the ultimate responsibility should be on the backs of people taking these loans. The amount of fraud out there by many of these borrowers is astounding and I am just upset that so many of them will now be getting assistance through loan modification and perhaps even some form of government help. For the responsible out there this is just sickening. Nonetheless, with housing bringing the economy and financial system down with it I understand the need for stimulus and help. It will help save us all. With so many people holding bad loans they seem to now have the power in the lender/borrower relationship. Much like Trump did in the early 90s.

Buying CFC here as an arbitrage play isn't a bad idea at all. Most likely the deal will go through as planned. The financial system will start to recover quickly with all the stimulus being pumped into it and BAC will have gotten a great deal. The risk is that BAC trades lower in the mean time or that the deal is halted or modified. Stephen, another benefit to the trade is the roughly 10% yield on CFC. This is an arbitrage deal worth a good 25% total return and you end up with owning shares of BAC. Not a bad deal!