Interest Rate Roundup

Thursday, June 26, 2008

Bank of America to lay off 7,500 after Countrywide deal closes

Some breaking news out of Bank of America: The company plans to get rid of 7,500 employees after it consummates its deal to buy Countrywide Financial. That's expected to happen July 1 now that Countrywide shareholders have voted in favor of the deal. Personally, I think this is a high risk deal that could prove to be one of the worst deals in the history of modern banking -- right up there with Wachovia buying Golden West Financial or First Union buying The Money Store (and merging with CoreStates, for that matter). But so be it.

4 Comments:

  • Mike Have you worked the numbers or is the "worst deal" just a gut feeling? I own BAC and wonder how low this will go.

    By Anonymous Anonymous, at June 26, 2008 at 5:30 PM  

  • Why do you think it's a bad deal?
    They'll get tax write-offs against past earnings and spin out all the "future" losses to a subsidiary. Then the subsidiary will go BK when it marks to market (or Fed bailout), and everyone but the taxpayers will be happy.

    By Blogger Patty, at June 26, 2008 at 11:53 PM  

  • I don't think it makes sense strategically. I think Countrywide's bank loan portfolio is packed with dud loans. I think the "brand equity" of the Countrywide name has been tarnished by all the bad press. I think there's likely a lot of overlap geographically and professionally, so BofA is probably going to end up closing Countrywide branches and jettisoning a lot of the workers it's acquiring anyway. I think the housing market is going to remain in the doldrums for some time. I think if BAC really wanted to build its mortgage volumes, it could have done it internally.

    By Blogger Mike Larson, at June 27, 2008 at 7:15 AM  

  • I was a former employee of Countrywide,, approx 3 yrs, now with ther merger I also agree that why would BOA keep the Countrywide branches open or the operations employees?? I strongly believe they will close/layoff. Thx

    By Blogger former, at June 30, 2008 at 10:29 PM  

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