Every go-go period on Wall Street has a spectacular flame-out that comes to symbolize the excesses of the day, from Sam Insull's Middle West Utilities during the Great Depression to Pets.com in the dot-com era. Now it's Countrywide Financial's (CFC) turn.
Bank of America (BAC) announced Jan. 11 that it is buying Countrywide in a deal that values the nation's largest mortgage broker at just $4 billion, or roughly $6.90 per share. Even that was a bit of a gift for Countrywide investors, who had seen their stock slip to just $5 a share in the past week as the company denied rumors it would seek bankruptcy protection. As recently as January, 2007, Countrywide's shares were selling for $42.
Bank of America Chairman and Chief Executive Kenneth Lewis said he did not plan on having Countrywide Chairman and Chief Executive Angelo Mozilo head the combined operations. "I would want him to stay until the deal gets done and then probably I would guess that he would want to go have some fun," Lewis said in a conference call announcing the deal.
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