Fed sets public hearings on BofA-Countrywide deal

By David Lawder

WASHINGTON (Reuters) - The Federal Reserve Board on Thursday took the unusual step of scheduling public hearings in Chicago and Los Angeles next month to get comments on the pros and cons of Bank of America Corp's (BAC.N: Quote, Profile, Research) planned $4 billion acquisition of mortgage giant Countrywide Financial Corp. (CFC.N: Quote, Profile, Research)

The announcement comes amid high public sensitivities surrounding housing and mortgage markets and the effect that the merger might have on mortgage modifications, particularly in high-priced California. It also comes the day after Senator Christopher Dodd, the chairman of the Senate Banking Committee, invited regulators, including Federal Reserve Chairman Ben Bernanke, as well as the CEOs of JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research) and Bear Stearns Cos. (BSC.N: Quote, Profile, Research) to testify at a hearing on April 3 about JPMorgan's bid to buy Bear Stearns, which kept the investment bank from entering bankruptcy.

The Fed said it would extend a 90-day public comment period on the proposed BofA-Countrywide deal by nearly a month, until the close of business on April 29.

A public hearing is scheduled on April 22 at the Federal Reserve Bank of Chicago's headquarters, with hearings on April 28 and 29 at the Los Angeles Branch of the Federal Reserve Bank of San Francisco, the central bank said in a news release.

The Fed rarely holds public hearings on merger decisions, but it said the public hearings are intended to collect information relating to the factors the board is required to consider to determine whether the merger is acceptable under the Bank Holding Company Act.

"These factors are whether the acquiring bank holding company's performance of the activities can reasonably be expected to produce benefits to the public (such as greater convenience, increased competition and gains in efficiency that outweigh possible adverse effects (such as undue concentration of resources, decreased or unfair competition, conflicts of interests and unsound banking practices)," the Fed said.

Some consumer advocacy groups have criticized Bank of America's response to the housing crisis, saying its balance sheet allowed it to do more to help troubled borrowers.

The deal would hand Bank of America a bigger segment of the U.S. market, creating a lender making one in four U.S. home loans and collecting payments on more than $1.9 trillion of mortgages.

(Reporting by David Lawder; Editing by Jan Paschal)