What have you always wondered about the economy? Tell Us

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.

News and information you need, from a source you trust.

In a world where it’s easier to find disinformation than real information, trustworthy journalism is critical to our democracy and our everyday lives. And you rely on Marketplace to be that objective, credible source, each and every day.

This vital work isn’t possible without you. Marketplace is sustained by our community of Investors—listeners, readers, and donors like you who believe that a free press is essential – and worth supporting.

Stand up for independent news—become a Marketplace Investor today with a donation in any amount.