Big investors turn down Countrywide settlement

The group of 33 plaintiffs, which includes Calpers, BlackRock, and T. Rowe Price Group, decided that $600 million was not enough, and they'll seek their own terms with Countrywide's owner, Bank of America, and its auditor, KPMG. The original lawsuit alleged that Countrywide made false statements and omissions about its procedures for underwriting loans, exposing investors to excessive undisclosed risk. Countrywide, or I should say B of A, remains knee-deep in litigation. From the LAT:

Bank of America had expected to sustain big losses when it acquired Countrywide in 2008 for stock then valued at $2.5 billion, said Stifel, Nicolaus & Co. analyst Christopher Mutascio. But he calculates that the actual cost to the bank will be at least $10 billion more than it had projected. A BofA executive familiar with the bank's initial projections regarding Countrywide acknowledged that the costs had been far higher than anyone at BofA had anticipated. But the executive, who was not authorized to speak publicly about the projections and insisted on confidentiality, said the forecasts were overly optimistic because bank executives underestimated "the depth and length of the downturn in housing," not because they had incorrectly assessed Countrywide itself.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
The multi-talented Mark Lacter
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