Bloomberg reports that Bank of America is taking over the financially solvent part of Countrywide Financial (ie, the assets) but isn’t quite so committed to the liabilities. And how they’re going about this cozy little arrangement is fascinating:
“Whalen expects Bank of America to absorb the best assets, including Countrywide Bank, while the debt remains with a new company created by the merger, Red Oak Merger Corp. Red Oak may then file for bankruptcy, shielding Bank of America from liability, Whalen said.”
Man. Where is Andy Fastow when you need him?
It is worth noting that Standard and Poor’s downgraded the Countrywide stock to junk today after initially saying it would raise the grade earlier this week.