No More 'Countrywide-Like' Deals for B of A

Every few years we see some analyst/advisor issue a report that says M&A deals are usually a waste of time and are rarely worth the money spent on them. Boy oh boy, does that ever apply to Bank of America and its purchases of both Countrywide Financial Corp. (the house that Angelo built), and Merrill Lynch. If it weren't for the CFC deal B of A might be riding high right now, but that's a matter for another time. We only mention this because B of A is holding its 'investor day' today with the first order of business being its declaration that it would be growing "organically" in the future as opposed to acquisitions. A little late there, Brian Moynihan. Then again CEO Moynihan can't be blamed for the CFC purchase of 2008 because that was a Ken Lewis deal. Ken (a 'friend of Angelo' for sure, but not in the mortgage sense) decided to bail out CFC in early 2008, thinking he was buying a premier mortgage franchise at a bargain basement price. Instead B of A caught a falling knife. (Or was it a falling machete?) Countrywide had $80 billion of on-balance sheet mortgages when it was sold to B of A – most of that product suspect in nature. Anyway, this morning, the bank also said it does not favor reducing the principal amount on any of its troubled residential loans. And one final note: B of A's share price has fallen 70% since 2007. Ouch.