S&P downgrades BofA

| 20 June 2008 13:34

You kind of saw this one coming. Bank of America is crazy to take Countrywide Financial’s balance sheet onto its books. Apparently, S&P Equity Research agrees and correctly downgraded BofA to a sell rating because of the risk.

Note: Oppenheimer’s Meredith Whitney expects BofA to eventually be forced to cut its divided.

S&P said

“We take unfavorable note of the large Countrywide option-adjustable rate mortgage portfolio that Bank of America will inherit, since we believe this portfolio has yet to be stress tested.”
-MarketWatch, 20 Jun 2008

Stay tuned.

Hat tip to CalculatedRisk

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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages, a skill he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

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