Bank of America may face $6.5 bln loan loss

Source : Reuters

"NEW YORK (Reuters) - Bank of America Corp (NYSE:BAC - News), the largest U.S. retail bank, may set aside a record $6.5 billion in the first quarter to cover possible future loan losses, including in its mortgage and home equity portfolios, according to a banking analyst."

We'll have to wait and see but Countrywide is supposed to bring much more than this number onto Bank Of America's books. Countrywide as we all know was the powerhouse for the most lousy loans "Made In USA". As I prefer to call it "Subprime - Made In The USA" and Angelo Mozillo definitely amassed a personal fortune doing it.

"The all-stock transaction values Countrywide at $7.63 per share, which is 32 percent above Countrywide's Thursday closing price of $5.78. The gap reflects some investors' expectations that Bank of America might at least try to renegotiate the merger terms because the housing market has weakened."

Compare this purchase with that of Bear Stearns by JP Morgan, it definitely looks like Bank Of America got a very bad deal so it's definitely worth re-negotiating especially when absolutely no one is interested in buying Countrywide at this time and they were facing bankruptcy and a run as well. May be these mergers will all fall apart and never take place and were just attempts by the federal reserve to stabilize jittery markets.