Fed approves BofA Purchase of Countrywide

The Federal Reserve has officially approved the purchase of Countrywide by Bank of America. I am not surprised by this event. BofA and Countrywide have been working on this for months. I suspect that this purchase would have never been allowed if the fear of "Bank Failures" in the papers were not looming.

The purchase has been approved, but that does not mean by any means that it is complete. I suspect that some serious negotiations are occurring, but I would be surprised if the sale is not completed. The only question now is what is Countrywide really worth? Countrywide is the holder of thousands of foreclosures in California alone. One high profile foreclosure includes that of Ed McMahon.

From MarketWatch:

The Fed said Bank of America pledged to operate the combined mortgage operations under the bank's "polices, internal controls, and other risk-management systems."

House prices have fallen further since January, while mortgage markets and other credit markets have been severely jarred by the near collapse of Bear Stearns and downgrades of bond insurers.

That's increased concern about whether Bank of America will complete its purchase of Countrywide at the original terms. However, the bank has repeatedly stressed that it stands behind the deal.