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Countrywide: Potential Short Squeeze in the Offing

There is no need for any short to cover CFC. Upon closing of the merger a short position in CFC will be automatically converted to a short position in BAC as required by the securities lending agreement that pertains to the borrow of CFC. Consider also that if a merger arb. player is taking a position for a deal break they will also be long BAC both to capture the potential upside on BAC (arbs. long CFC will be short BAC and cover if the deal breaks) in a break and to hedge against a siginificant move up in BAC. Not only does the 6% discount matter but also the absolute price of BAC.