Bank of America to Buy Countrywide for $4 Billion

By Sean Fenlon on January 15, 2008


So this is the headline I’ve been waiting for (posted just a few short hours ago):

http://www.businessweek.com/ap/financialnews/D8U5VNH80.htm

A few folks have wondered why I have not blogged about this Countrywide acquisition by Bank of America as of yet.

It’s because Countrywide has become quite a whipping post lately by the media.

I disagreed, but I’m glad to see that the CEO of Bank of America also disagreed.

If Countrywide was being acquired at 10X the deal price announced, the media’s perspective on Countrywide would probably have been largely the same.

To the media, Countrywide means mortgage, and Mortgage means Bad.

Hmmm…

Oh, really?

$4 Billion is still a LOT of money, last time I checked (put that number into perspective — $4 Billion is more than was spent in ALL of 2004 in election advertising and marketing, not just presidential).

So, here’s the ultimate question:

How many people currently reading this blog post currently live in a house (not a rental, apartment, or dorm)?

If you live in a house, chances are 90%+ that you have a mortgage on that home.

A mortgage company and mortgage-backed securities investors are all making a handsome profit on the fact that you actually pay your mortgage each month. I’ll thank you for that on their behalf.

Deeper analysis of this Countrywide/Bank of America deal equals …well… it depends…

It depends upon where Countrywide ultimately ends up on the BofA-controlled “Autonomy” slider.

Countrywide has become a massive and fantastic marketing machine that is not afraid to crank up its most important growth driver (advertising and marketing) in a down market.

Countrywide is a smart marketing company. They know how to acquire new borrowers cheaper than most of their competitors.

Hopefully, Bank of America will not feel compelled to combine the collective marketing strategies under one brand or department.

But then again, I’m biased. Your mileage may vary. :-)

SPF


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