Is Countrywide (CFC) Worth $0

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One of the interesting by-products of S&P cutting Countrywide’s (CFC) debt to junk is that Bank of America (BAC) may be frightened witless now about taking over the mortgage banker.

According to MarketWatch, the ratings agency said that "there is no assurance that any of Countrywide’s debt will be "redeemed, assumed, or guaranteed" after their pending merger, according to the ratings agency."

The fact that Countrywide’s portfolio and balance sheet are in free fall make it as likely that the financial firm will go bankrupt as it is that BAC will close the transaction.

Friedman, Billings, Ramsey took a very dim view of the S&P downgrade and cut Countrywide to "underperform" from "market perform," according to Reuters. The brokerage cut its target on Countrywide’s stock to $2 from $7.

Housing is getting worse and not better. Defaults are rising not falling. The FBI is looking at CFC’s lending and disclosure practices.

What is Ken Lewis, the CEO of Bank of America saying? Probably "pull out before we get hurt."

Douglas A. McIntyre