Taxpayers to foot the bill for countrywide's sins

Countrywide\\

money.cnn.com

NEW YORK (Fortune) -- Guess who\'s helping Bank of America pay for its $4.1 billion purchase of Countrywide Financial? Answer: The taxpayers of the United States.....

That\'s because Bank of America (BAC, Fortune 500), which is solidly profitable, will be able to use some of Countrywide\'s losses to offset its own taxable income. The tax break could total about half a billion dollars over the first five years, according to an estimate by tax guru Robert Willens, who left Lehman Brothers Friday after a 20-year run and will be in business as Robert Willens LLC starting next week. The losses could be worth considerably more to Bank of America starting in the sixth year, depending on how big Countrywide\'s losses are when Bank of America formally acquires it.

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[edit on 13-1-2008 by jefwane]

Hmmm so maybe BoA didn\'t buy CFC for its intrinsic value. Read the article and it looks like BoA has done something similar to this befoe. CFC was a definate Bankruptcy play before this deal. The only thing CFC has that BoA could possibly see as a long term asset is the servicing portion of CFCs business. I\'ve read on bulletin boards (i know) that the only thing of value left in CFC is there servicing platform.

money.cnn.com
(visit the link for the full news article)

EDIT: Full disclosure: no position in CFC, BAC or XLF. However seriously considering buying puts against BAC with this move.

[edit on 13-1-2008 by jefwane]