Bank of America Corp. bought $2 billion of preferred stock from Countrywide Financial Corp., erasing concern the nation’s largest mortgage lender will go bankrupt and boosting investor confidence in stocks worldwide. One day earlier the four largest U.S. banks — Citigroup Inc, Bank of America Corp, JPMorgan Chase & Co and Wachovia Corp — said they borrowed $2 billion from the Fed to show support for the financial system.
Show support? More like easy money so B of A could buy into Countrywide.
“Countrywide is no longer on the endangered company list,” Punk Ziegel & Co. analyst Dick Bove wrote in a note to clients yesterday. “This investment makes sense for both companies. Bank of America will now presumably be the preferred lender to Countrywide.”