Reply #90: Countrywide Takeover May Help Banks [View All]

[citizen snips]

NEW YORK (AP) -- As many as 20 banks may benefit from Bank of America Corp.'s planned buyout of troubled mortgage lender Countrywide Financial Corp., a Friedman Billings Ramsey analyst wrote Wednesday.

While it's best known for loaning money to consumers to buy and refinance homes, Calabasas, Calif.-based Countrywide also serves as a thrift taking in deposits and offering products such as savings and money market accounts and certificates of deposit.

Consumers who have banked with Countrywide have enjoyed better rates than found at many other financial institutions. Countrywide pays 0.5 percentage point to 1 percentage point above its competitors on some products, according to Friedman Billings analyst James Abbott. Countrywide's rates beat those of competitors Washington Mutual Inc. and E-Trade Financial Corp., he said.

"For the last few years, many banks we have spoken to have complained that Countrywide and a couple of other suspects were causing havoc on CD pricing, aka the 'Countrywide Effect,'" Abbott wrote in a note to clients. Countrywide is the 13th largest player in the CD market, and the company held 1 percent of total CDs in the U.S. as of September, according to Abbott.

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http://biz.yahoo.com/ap/080116/countrywide_analyst_note.html?.v=1