TA

BofA's Countrywide Purchase is a Huge Mistake

As to your first comment about the size, clearly this was a way of skirting the 10% limitations that can only be done in a crisis. Also remember that's 10% of US deposits, not international(China Construction Bank anyone).

As for the falling knife concept, that makes sense as investor but how does this apply to the whole sale when it's made at bankruptcy prices? Granted the original 2 bill purchase was a clear mistake but what about the 84% for 4 bill?

What kind of premium is that for the lucrative servicing business?
Do you not think they can tear apart the company and wring 4 bill worth of equity out of it? Does 4 bill really mean much to a cash balance of nearly 400 bill?

I guess you are a not a follower of Buffett/Graham where you should always buy assets for pennies on the dollar if you can. No idea if you were around then but I'm sure you would have written this same short article on American Express when Buffett put 30% of his money into it.

Of course if you believe in amageddon, then your argument makes perfect sense.

As for your short, well the easy money has been made which is clear from friday's broad based financial short covering. I don't doubt that it could easily go lower but your risk has now gone up, hopefully the reward is worth it.