Explaining Southern California's economy

Is Bank of America about to put Countrywide into bankruptcy?

Bank of America's stock price is drifiting down again today, edging precariously close to $7. There's really no convenient way to phrase it: the bank continues to suffer a hangover from its pre-financial crisis acqusition of Countrywide. So how do you solve a problem from Mozilo? Possibly...bankruptcy? This is from Bloomberg:

The option of seeking court protection exists because the Charlotte, North Carolina-based bank maintained a separate legal identity for the subprime lender after the 2008 acquisition, said the people, who declined to be identified because the plans are private. A filing isn’t imminent and executives recognize the danger that it could backfire by casting doubt on the financial strength of the largest U.S. bank, the people said.

The threat of a Countrywide bankruptcy is a “nuclear” option that Chief Executive Officer Brian T. Moynihan could use as leverage against plaintiffs seeking refunds on bad mortgages, said analyst Mike Mayo of Credit Agricole Securities USA. Moynihan has booked at least $30 billion of costs for faulty home loans, most sold by Countrywide during the housing boom, and analysts estimate the total could double in coming years.

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Reportings: Machine trading; Broadcom buys NetLogic; Greek doom; Countrywide bankruptcy

Irvine-based Broadcom is dropping $3.7 billion to buy NetLogic Mircrosystems, in an all-cash deal. Who says there's no tech juggernaut in SoCal (with deep pockets, to boot)? This is the LA Times' David Sarno on Broadcom earlier this year: "With nearly three-quarters of its 8,300 employees devoted to electrical engineering, the company has been able to storm markets where it had little experience, often dominating them within a few years." (Bloomberg, LAT)

 

Blame Germany for all this stock-market volatility? With a Greek debt default looking inevitable, the big question is whether the country stays in the Euro. And if it exits, what's next for Italy and Spain? (Bloomberg)

 

Blame the machines for all this stock-market volatility? Hmmm…not sure. But automated trading now accounts for 60 percent of "daily turnover" in four major markets. (NYT)

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