Straight from the discount window to a bailout for Countrywide

Bank of America to Invest $2 Billion in Countrywide

By Valerie Baurerlein
The Wall Street Journal
Wednesday, August 22, 2007

Bank of America Corp. is making a $2 billion equity investment in Countrywide Financial Corp., the embattled mortgage giant, according to people familiar with the situation.

Countrywide, the nation's biggest mortgage lender in terms of loan volume, and many rivals are struggling to regain the confidence of investors and depositors amid a surge in defaults that has made it harder for the lenders to borrow money and raised questions about their financial health.

Last week the commercial-paper market, a critical source of short-term funding for an array of companies, was becoming inaccessible for a growing number of companies. Most notably, Countrywide last week tapped an $11.5 billion credit line because it was facing funding difficulties.

Because investors are recoiling from buying mortgages deemed risky, Countrywide and other lenders are being forced to concentrate on home loans they can either keep as long-term investments or sell to government-sponsored mortgage investors Freddie Mac and Fannie Mae. Countrywide said last week that it aims to use its bank unit to provide funding for a much larger proportion of its loans than in the past.

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Bank of America and three other big banks today borrowed $2 billion from the Federal Reserve's discount window:

http://news.yahoo.com/s/ap/20070822/ap_on_bi_ge/banks_fed_window;_ylt=Ag...

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