TEXT OF INTERVIEW
Scott Jagow: One mortgage company that can breathe a little easier, at least for now, is Countrywide. Last week, Countrywide got a $2 billion cash infusion from Bank of America. It wasn't charity, by any means. B of A got stock in return and immediately made a profit. Fortune Magazine's Allan Sloan is here. Allan, how sweet of a deal was this for Bank of America?
Allan Sloan: Well it was a very sweet deal. Bank of America was dealing with a desperate company on the other end of the transaction and when you look at the security that Bank of America bought from Countrywide, they paid $2 billion for a piece of paper that the last time I looked was worth at least $2.5 billion and possibly much more.
Jagow: Yeah but isn't Bank of America taking on some kind of a risk here? Because people were talking about Countrywide possibly winding up in bankruptcy.
Sloan: Oh sure it's taking a risk, but Bank of America is in the risk business and this is a great security. I would've been perfectly happy to lend Countrywide $2 billion on the same terms as Bank of America, I just don't happen to have $2 billion. I hope you'll float me a loan.
Jagow: No I'm sorry, can't do that. Well Allan, the Fed has done a little bit here, injecting a lot of cash into the system, so you think the Fed is taking advantage of the situation?
Sloan: No the Fed is acting like a regulator instead of a capitalist. The Fed put God-only-knows how many hundreds of billions of dollars into the market for a while when things were really bad and that's where I would like to think they could've gotten a better rate because they were dealing with desperate borrowers. And my feeling is if the Fed is bailing out some imprudent player like a big Wall Street house, well why doesn't the Fed negotiate a deal like the one Bank of America got where you've got a desperate borrower and you squeeze 'em and you get some big bucks? And I think the answer is a) they don't think that's their business and b) it's not clear to me they know how to do it because I figure by the time all the committees had met to decide on it, the institution would have either failed or the crisis would have passed. But my contention has been from the beginning that the Fed and the European Central Bank are putting so much money in, that they ought to make some money out of this on behalf of the taxpayers of their countries.
Jagow: All right Allan thanks a lot.
Sloan: My pleasure Scott.
Jagow: Allan Sloan is a senior editor-at-large at Fortune Magazine.