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.
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