Bank Of America Reportedly Keeping Countrywide Bankruptcy As Option
Countrywide Financial's lawsuit losses could compel parent Bank of America Corp (BofA) (BAC.N) to put up the unit on the bankruptcy block, Bloomberg reported citing four people with knowledge of the firm's strategy.
The bankruptcy option exists because the bank maintained a separate legal identity for the subprime lender after buying it in 2008, said the people, who declined to be identified because the plans are private.
However, a filing is not imminent and the executives are aware that the move could backfire and cast doubt on the largest U.S. bank's financial strength, Bloomberg cited the people as saying.
Charlotte, North Carolina-based Bank of America has lost more than $22 billion from its consumer mortgage division in the last four quarters, in large part because of loan losses and legal settlements linked to Countrywide.
In August, American International Group Inc (AIG.N) sued BofA for over $10 billion, saying the bank was liable for Countrywide's mortgage bonds as its legal successor.
(Reporting by Shravya Jain in Bangalore, editing by Bernard Orr)
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