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Monday, June 02, 2008

BofA CEO: Countrywide Deal Remains "Compelling"

by Calculated Risk on 6/02/2008 04:01:00 PM

Ken Lewis is speaking on a conference call sponsored by Deutsche Bank today.

Greg Morcroft at MarketWatch has the details:

Countrywide deal remains "compelling transaction"-B of A CEO

Problem loans likely to peak this year: Bank of America CEO On problem loans:

"I think we'll see some spikes in the second quarter, then some leveling later this year, and some declines next year."
And on CRE:
Lewis also said that the firm's commercial real estate loan portfolio remains in generally good shape ... "In commercial real estate, homebuilders is the spot we see the losses and the non-performers," he said. Other than that, he said, "we haven't seen many cracks in the commercial real estate portfolio."
And on HELOCs: Bank of America targets 8 - 8.5% Tier 1 capital ratio
Lewis ... said he sees home equity losses going above 2% of the firm's home equity portfolio, and said credit card charge offs "could be slightly above 6% in the next quarter or two."
So problem loans will "spike" in the second quarter, and then level off. Let me be the first to predict Q3 will "surprise" and be worse than Q2!

And on Countrywide: the deal may remain "compelling" to Lewis, but I wonder if he has asked why the Countrywide REO inventory is declining - while REOs for everyone else are increasing substantially? I've heard a rumor that Countrywide has simply stopped foreclosing on loans, and some analysts think they might be under reporting their delinquencies.