Bank of America’s Buyout of CFC very much on the cards
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Countrywide Financial Corp (CFC), is a diversified financial marketing and service holding compay. The major part of it’s business is servicing mortgages. In fact, it is estimated that out of all mortgages in the US, 20% of them are financed by CFC.
Bank of America (BoA) had acquired a 16% stake in CFC last summer for $2 Billion. Further to this, it is also planning to buy out CFC for $4 Billion. However, there are some who feel that this should not take place.
Opposition is coming from consumer groups who feel that the deal is not sensitve to the concerns of Americans who are burdened under a housing crisis. The Federal Reserve, is sponsoring two hearings of the isusue, the first of which took place on Tuesday, and the second of which is slated to to take place in Los Angeles later in this month.
However, analysts feel that the buyout will happen nonethelss, primarily because the Federeal Reserve want it to happen. Amid some concerns, it has once before helped a troubled Financial services firm to seal a deal with JP Morgan.
The other reason, is that the BoA wants to protect it’s $2 Billion investment. It would also make BoA America’s largest lender, in addition to extending it’s arm into the Mortgage Business.
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