Bank of America Corp, the largest US bank by market value, plans to press ahead with its US$4 billion takeover of Countrywide Financial Corp, the mortgage lender under investigation by the FBI for possible securities fraud.
The FBI is scrutinizing whether ranking officials at Countrywide misrepresented the company's financial position and the quality of its mortgage loans in regulatory filings, said a person with knowledge of the probe on Saturday. Bank of America spokesman Scott Silvestri said the acquisition of Calabasas, California-based Countrywide remains on track.
"Nothing I've seen suggests that Bank of America is backing off," said Tom Atteberry, a partner at Los Angeles-based First Pacific Advisors LLC, which oversees US$2 billion. "It's in everyone's best interest that Countrywide avoid bankruptcy and it's hard to believe that there isn't some kind of agreement to help Bank of America avoid some of these legal problems."
Countrywide has declined 20 percent in New York trading since Bank of America offered to buy the biggest US mortgage lender on Jan. 11 in a stock swap. Investors have speculated the Charlotte, North Carolina-based bank may seek a lower price or walk away because the housing slump has deepened, with record foreclosures and falling home prices.
The FBI's probe is at a preliminary stage, said the person, who declined to be identified because he wasn't authorized to speak about the investigation. Officials at Bank of America declined to comment about the FBI probe on Saturday, the day it was disclosed in the Wall Street Journal. FBI spokesman Richard Kolko also declined to comment. Countrywide spokeswoman Jumana Bauwens said the company wasn't aware of the FBI probe.
Countrywide is among at least 14 companies the FBI is checking for possible violations tied to the subprime lending crisis, including mortgage lenders, developers and Wall Street firms that packaged loans into securities. The FBI disclosed the review in January without naming any companies.
Lenders are facing increased scrutiny from regulators as record defaults displace homeowners, roil credit markets and threaten to tip the US into recession.
"It's not uncommon for the FBI to investigate matters that have created such controversy," said Gary Townsend, co-founder of Chevy Chase, Maryland-based money management firm Hill-Townsend Capital. "This is just one more thing for Bank of America to watch as they move forward on this deal."
Analysts, including Paul Miller of Friedman Billings Ramsey & Co in Arlington, Virginia, criticized Bank of America for paying too much for Countrywide, citing the increase in overdue payments. Shareholders, including Bill Miller of Baltimore-based Legg Mason Capital Management, which held about a 9 percent stake at the end of December and the SRM Global Fund, with 5 percent, said Countrywide sold for too little.
"There are conflicting views within the Bank of America board on whether this is a good deal," said David Lykken, founder of Austin, Texas-based industry consulting firm Mortgage Banking Solutions. "Ultimately, the economics will prevail and it will get done."
Lykken said officials from the FBI have contacted him in recent months with general questions about the industry. Lykken said investigators may be focused on income and credit information disclosed by borrowers and presented by lenders, he said.
"There's a whole lot of excitement and hullabaloo, but proving criminal conduct is likely to be difficult," Lykken said. "A lot of people were caught up in the atmosphere when the housing market was booming."
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
US President Donald Trump yesterday announced sweeping "reciprocal tariffs" on US trading partners, including a 32 percent tax on goods from Taiwan that is set to take effect on Wednesday. At a Rose Garden event, Trump declared a 10 percent baseline tax on imports from all countries, with the White House saying it would take effect on Saturday. Countries with larger trade surpluses with the US would face higher duties beginning on Wednesday, including Taiwan (32 percent), China (34 percent), Japan (24 percent), South Korea (25 percent), Vietnam (46 percent) and Thailand (36 percent). Canada and Mexico, the two largest US trading
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
China's military today said it began joint army, navy and rocket force exercises around Taiwan to "serve as a stern warning and powerful deterrent against Taiwanese independence," calling President William Lai (賴清德) a "parasite." The exercises come after Lai called Beijing a "foreign hostile force" last month. More than 10 Chinese military ships approached close to Taiwan's 24 nautical mile (44.4km) contiguous zone this morning and Taiwan sent its own warships to respond, two senior Taiwanese officials said. Taiwan has not yet detected any live fire by the Chinese military so far, one of the officials said. The drills took place after US Secretary
RSS