Summary
Implications: 1.The Up-Side of Bank Of America walking away from the Deal - a positive Earnings per Share Ratio for Shareholders.A potential positive savings of the current staus: 2.0% to 9.0%. 2.One other Up-Side - Eliminate a remote possibilty of having to raise additional Capital and maintain an equitable Liquidity position. 3.Impact on Countrywide - Bankruptcy with No Government Intervention.Management with the Deep Pockets must increase the Capital Base with their Personal Assets.Ignorant, at best. 4.Renegotiating the Deal will only magnify the impact on the Financial Marketplace and ALL players in the Financial System may be forced to re-capitalize. A further deterioration is unnecessary! 5.Countrywide's credit quality has a CONSISTENT methodology of Destruction to the Financial Marketplace and the overall economy. 6.A Statement of Historical Content - " Bank of America should, indeed, walk away from the Deal and Apply Sound Business Concepts".
Analysis
Commentary:
1.A major credit rating agency has , indeed, held the sound business
practices by defining Countrywide as "JUNK"! Indeed, a viable and truthful statement of fact - value added to the business community.
2.The concept of "Accountability" has been violated. A prosecution by the Regulatory Authorities should be inevitable.
3.Bank of America should not and, hopefully, will not honor the debt issued by Countrywide Financial.
4.Perhaps, the Schools of Business/Banking should re-write the Academic Book of Business Theory.Grants are to be excluded.
5.The Shareholder: a dramatic price-down of their holdings.
6.Home prices are falling at a much steeper rate than reported and the cost of credit is becoming mis-leading. A very sad commentary.
