If the announced planned merger of [tag]Bank of America[/tag] and [tag]Countrywide[/tag] Financial Corp goes through, BofA will be involved in about one in every four mortgage loans in the United States.
One in four!
Now one way to look at this is, this is a good thing. It will probably rescue Countrywide -described by the New York Times as, “the troubled lender that became a symbol of the excesses that led to the [tag]subprime mortgage[/tag] crisis.”
Another way to look at this is bad…bad news for the U.S. [tag]economy[/tag] and one of the biggest signs to date just how fast it is sinking beneath a tidal wave of For Sale signs.
Because the head of BoA ,Kenneth Lewis, has been quoted as saying that, although his bank always wished to be a much bigger player in mortgage banking, he wouldn’t even think of buying up another mortgage lender, such as Countrywide, “until blood is running in the streets.”
Guess the blood has started to gush enough to get Bank of America’s interest.
Meantime, the damage done by the subprime mortgage fiasco just keeps getting worse with no end in sight.
The head of the Federal Reserve is now painting a really bleak picture of the economy, a real about face from only a few months back.
Says Ben Bernanke, “The outlook for real activity in 2008 has worsened.”
With that very much in mind, [tag]Bernanke[/tag] has suggested that the Fed might make yet another, bigger cut in interest rates and real soon.
That’s good, because American consumers are not exactly happy campers right now.
The biggest retailers in the nation are saying that their holiday sales gains are weaker now than any time in the past five years.
But even that may be too little and much too late, which may force Congress to step in and do what it always tries to do when capitalism runs amok: slap government controls on parts of the economy.
Remember how when word of the subprime mortgage problem first really got the attention of the public and news media, it seemed a somewhat localized problem with a quick fix provided by slightly lower Fed rates the obvious answer?
Well, forget that. This has turned into a global [tag]credit crunch[/tag] leading to the forced resignations of some banking and mortgage lending giants’ chief executives, not to mention the almost certain prospect of tens of thousands, if not millions, of homeowners on the cusp of foreclosure.
So, I say, bless Bank of America for buying the United States. Heck, it might as well snap up Canada and Mexico while it’s at it.
That way, if nothing else, everyone will save on those nasty ATM fees cause we will all be customers of Bank of America one way or the other.