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Countrywide gets some color back

Amy Scott Aug 23, 2007

TEXT OF STORY

Scott Jagow: The struggling mortgage lender Countrywide has found a knight in banking armor.It’s Bank of America. Last night, we learned that B of A will invest a big pile of money in Countrywide. In return, Bank of America gets stock. Amy Scott has more on the deal.


Amy Scott: Bank of America’s $2 billion investment gives Countrywide some much-needed cash.

The country’s largest mortgage lender has been battered by the rise in subprime loan defaults and the resulting credit squeeze.

B of A’s vote of confidence is boosting markets around the globe today. Bloomberg News reports that the perceived risk of owning corporate bonds fell to its lowest level in a month.

Joel Naroff is president of Naroff Economic Advisers:

Joel Naroff: Anything that provides additional belief that we’re going to be getting through the subprime problem is a help. Though there’s no question we have a way to go before we do see the bottom.

Analysts predict mortgage defaults will continue to rise as borrowers with initially low short-term interest rates find their costs going up.

In New York, I’m Amy Scott for Marketplace.

Jagow: Countrywide shareholders are practically dancing in the street this morning, Wall Street that is. The company’s shares shot up 14 percent on this news.

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