Countrywide rumors baseless says Bank of America chief

Source: Construction Digital

Date :15/01/2008 11:02:32

Rumours that troubled mortgage lender Countrywide has been on the verge of bankruptcy were unfounded, Bank of America Corp. Chief Executive Ken Lewis said yesterday.

"I think the bankruptcy was a malicious rumor," said Lewis, denying that government pressure to keep the nation's largest mortgage lender out of bankruptcy played any role in his company's decision to acquire Countrywide for $4.1 billion in stock, rescuing the country's biggest mortgage lender and expanding the financial services empire of the nation's largest consumer bank.

Before the deal was announced last week, shares in Countrywide hit a record low on persistent rumors that a bankruptcy was imminent, a condition brought on by the widespread spike in mortgage defaults and foreclosures, especially in subprime loans -- those made to borrowers with weak credit.

Unfounded

"I don't know all the reasons," Lewis said of what he described as baseless rumors.

"They had a very impressive liquidity plan; they had their backup lines in place," Lewis said before a speech to the Delaware State Chamber of Commerce.

Asked about potential job cuts resulting from the transaction, Lewis noted that Countrywide will operate separately after the deal closes in the third quarter and it would not be integrated before 2009.

"At some point we will address the issue of jobs, but we haven't done that at this point," he said.

January 15, 2008