Explaining Southern California's economy

Bank of America continues to end its Countrywide problem

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Bank of America has agreed to a $10 billion deal with Fannie Mae, related to the charge that its Countrywide loans were bogusly represented.

Oh, what a difference five years makes! Back in 2008, Bank of America bought Countrywide Financial — then based in Calabasas, Calif. — for $4.1 billion, a fire-sale price at the time given the heights to which the now notorious subprime lender had soared.

But even at that price, Countrywide eventually became a giant concrete-filled truck tire around BofA's neck. In 2011, BofA saw its stock price plummet. CEO Brian Moynihan hadn't done the Countrywide deal, but he was dealing with the ugly aftermath. At one point, when the entire financial services sector was swooning, billionaire investor Warren Buffett swept in to support BofA and put a floor under the fall.

That didn't stop speculation about BofA putting Countrywide into bankruptcy — which would have led to the first big test of a major bank failure in the post-"To Big to Fail" era. I blogged about it at the time:

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