The Federal Reserve will hold public hearings next month in Los Angeles and Chicago before ruling on Bank of America Corp.’s planned acquisition of Countrywide Financial Corp.

The meetings will be held on April 22 in Chicago and April 28 and 29 in Los Angeles (see announcement).

The Federal Reserve will hold public hearings next month in Los Angeles and Chicago before ruling on Bank of America Corp.’s planned acquisition of Countrywide Financial Corp.

The meetings will be held on April 22 in Chicago and April 28 and 29 in Los Angeles (see announcement).

The Fed — which held similar hearings before approving the merger of J. P. Morgan Chase & Co. and Bank One Corp. in 2004 — said it’s looking for public input on whether the merger’s possible benefits would outweigh potential problems such as decreased competition or conflicts of interests.

The National Community Reinvestment Coalition welcomed the Fed’s decision to hold hearings, saying "clarity about the details of the merger would be useful, considering the size and scope of the lending activities that Bank of America and Countrywide conduct."

In a statement, NCRC said it sees a potential for "significant and positive outcomes as a result of the merger," because the combined company would be subject to additional oversight under the Community Reinvestment Act.

Although some have speculated Bank of America would attempt to back out or renegotiate the terms of the $4 billion acquisition, Chief Executive Officer Ken Lewis has repeatedly said the deal will be completed — even after Countrywide reported a $422 million fourth-quarter loss (see Inman News story).

In announcing their plans to acquire Countrywide, Bank of America officials said they were interested in their rival’s extensive retail, wholesale and correspondent distribution networks. Countrywide officials agreed to the deal after the credit crunch made it harder for the company to fund new loans.

Countrywide services nearly $1.5 trillion in loans, with 9.1 percent of those loans delinquent or in foreclosure at the end of February (see story). Fitch Ratings on March 12 cut Countrywide’s long-term issuer default rating to "BBB-" the lowest investment-grade category (see story).

Countrywide is reportedly one of more than a dozen companies the FBI is investigating as part of a probe into the packaging of subprime loans as securities sold to Wall Street investors, which could provide Bank of America an avenue to back out of the merger.

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