BofA (BAC) Says Countrywide Bankruptcy an Option

According to four unnamed sources, Bank of America (NYSE:BAC) says if the parent company is threatened by the losses associated with litigation, they will consider declaring bankruptcy with Countrywide, according to a Bloomberg report.

They would be able to do that because Countrywide operates as a separate legal entity even though they are owned by Bank of America. That allows Countrywide to declare bankruptcy without the entire financial institution declaring bankruptcy.

Even so, it could give the company a black eye and generate questions on how it could respond to its other subsidiaries. Bloomberg also pointed out it could have a negative impact on the credit rating of the giant bank.

Bank of America was trading at $7.14, down $0.19, or 2.59 percent, as of 10:57 AM EDT.