Bank of America Tries to Cut Their Losses

Bank of America made a $2 billion dollar investment in Countrywide Financial in 2007, and investment which quickly lost about 75% of its value. Now the banking giant has purchased the foundering mortgage company:

CHARLOTTE, N.C. (AP) - Bank of America said Friday it will buy Countrywide Financial for $4.1 billion in stock, a deal that rescues the country's biggest mortgage lender and expands the financial services empire of the nation's largest consumer bank.

The acquisition will make Charlotte-based Bank of America Corp. (BAC) (BAC) the nation's biggest mortgage lender and loan servicer.

Bank of America said it initially plans to operate Countrywide separately under the Countrywide brand, with integration occurring no sooner than 2009.

The transaction represents a 7.5 percent discount to where Countrywide shares ended Thursday after they soared on news that a rescue plan was in the works. It also effectively leaves Bank of America with a big loss on its $2 billion August investment in Countrywide Financial Corp. (CFC) (CFC) during the height of the summer's global credit crisis.

Countrywide is based in Southern California and has already laid off thousands of workers. There's no word yet on what will become of the remaining staff in their various Southland offices.