Bank of America is Off the Hook for Countrywide's Mistakes

Ever get the feeling that the banks just don’t lose?

$352 billion in mortgage bonds were sold by Countrywide to pension fund investors.  The investors claim that the amount of risk for these loans was not disclosed, they were originated with sub-par underwriting and then later sold as sold as higher quality than they actually were.

Countrywide became Bank of America…does that mean that Bank of America is responsible for Countrywide’s liabilities?

Bank of America benefits from Countrywide’s assets.

What do you think?

Well, according to the structure that Bank of America and Countrywide put in place coupled with Delaware law, the parent company is not responsible for the loans packaged regardless of whether or not they were misled.

In this case, the investors bought into a company that went under which was Countrywide and there is nothing that can be done by the new “owner” of the company.

What do you think about this?