Countrywide acquisition might not save lender

NEW YORK (AP) — Countrywide’s acquisition by Bank of America Corp. was supposed to help keep the troubled mortgage lender from collapse. Things might not turn out exactly as planned.

The people who did the deal hoped that a strong bank would rescue a weak one. But the deal’s structure may have only delayed the inevitable — Countrywide still could face bankruptcy or a federal takeover potentially involving taxpayer dollars.

We aren’t facing either yet, but it would be naive to count them out.

“This deal is so rancid and unpredictable,” said Christopher Whalen, managing director at the consulting firm Institutional Risk Analytics. “Bank of America’s executives can’t even articulate what the total liabilities from this deal are.”

Countrywide bondholders have been agitated that Bank of America didn’t structure this as a direct merger. Instead, it shuffled Countrywide’s $38 billion in outstanding debt into a wholly owned subsidiary.