Wednesday, December 29, 2010

Bank of America's (NYSE:BAC) Headaches Growing from Countrywide Acquisition

It's a surety that Bank of America (NYSE:BAC) had an idea there would be some headaches related to their acquisition of Countrywide Financial, but the recent lawsuit by Allstate (NYSE:ALL) for $700 million against the banking giant for alleged lowering of mortgage standards, which resulted in loans facts being left out of the process, that would have shown the poor quality of the mortgage-backed securities they were purchasing.

Bank of America had nothing to do with originating loans, but via their acquisition of Countrywide in 2008 are now responsible and liable for them if they incur any damages.

BofA responded to the allegations in a statement saying, "We are still reviewing the complaint, but this unfortunately appears to be a situation where a sophisticated investor is looking for someone to blame for a downturn in the economy and losses on an investment it made."

Allstate acquired the mortgage-backed securities from March 2005 to June 2007.

Bank of America closed Tuesday at $13.34, up $0.07, or 0.53 percent. Allstate closed at $32.00, down $0.09, or 0.28 percent.

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