As Bank of America continues to lop off mortgage divisions, and lets its retail residential work force wither away there is renewed talk that it may finally throw Countrywide Funding Corp. -- the mortgage banker it bought three years ago -- into bankruptcy. It's not every day that a bank holding company uses chapter 11 for one of its divisions and indeed such a maneuver would need the approval of the Federal Deposit Insurance Corp., and whatever other regulators the bank answers to. But one potential stumbling block to a bankruptcy filing is this: just how much of CFC has been integrated into the bank versus it remaining as a “stand alone” unit. An integrated CFC might cause operational problems, a stand alone would not.
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