Instant View: Bank of America to buy Countrywide

NEW YORK (Reuters) - Bank of America Corp on Friday said it agreed to acquire struggling mortgage lender Countrywide Financial Corp for about $4 billion in stock, a move that could help avert one of the biggest collapses in the U.S. housing crisis.

Countrywide shares fell 15.1 percent to $6.58 after Bank of America set the takeover terms at a discount to Thursday's Countrywide close. Bank of America shares traded 2.7 percent lower to $38.25 on the news Friday.

COMMENTS:

NANCY BUSH, BANKING ANALYST AND MANAGING MEMBER,

INDEPENDENT RESEARCH FIRM NAB RESEARCH LLC, AIKEN, SOUTH

CAROLINA.

"I'm breathing a big sigh of relief. This takes out a major point of uncertainty in the industry. It's certainly good for financial stocks overall."

"It's a tremendous beneficial deal for the whole financial services industry. That's why I cant believe there won't be some kind of regulatory reward for BofA.

"This deal will be particularly helpful to Wamu. It's putting a floor under the mortgage industry. It says there's value here. It says somebody finally hit the bid. It's putting a floor under what had been a freefall. At some price with unknown details, somebody is ready to step in and step in a big way."

MICHAEL MULLANEY, PORTFOLIO MANAGER, FIDUCIARY TRUST CO.,

BOSTON

"I'm a little bit skeptical just on the shear size of it, even though they're buying it at very cheap levels right now.

"We don't feel like we're anywhere near out of the woods as far as this whole mortgage market, housing market, subprime morass that we're in right now. We don't think this is going to probably reach a bottom until at a minimum mid 2008, just based upon the way that these loans were brought to the marketplace in 2005 and 2006.

"We still got a lot of resets we got to get through right now and probably a lot more defaults and obviously some more delinquencies.

"We don't see a bottom so far as the Countrywide business model being anytime near. It's a large acquisition. It's going to change the nature of Bank of America's business obviously as far as being very heavily weighted toward home mortgages.

"They have exposure right now, but now they're going to have an extraordinary amount of exposure. The balance they had before, which we liked, is somewhat more suspect right now. I think it might be a little bit premature right now as far as this move is concerned."

RICK MECKLER, PRESIDENT, INVESTMENT FIRM LIBERTYVIEW

CAPITAL MANAGEMENT, JERSEY CITY, NEW JERSEY:

"I think it's a positive in a general way for the financials in that it does show at least on the asset side there is some value to the mortgage holdings... That was the fear -- that everything was a complete write-off, and it does sort of validate there was some value in their holdings.

"The negative side is that Bank of America needed to step in, and there's still a lot of value lost by Countrywide shareholders. (Also) it's naive to think we're at the end of the process in terms of recognizing losses from the mortgage crisis."