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Strategies & Market Trends : Value Investing

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To: NikhilJog who wrote (44723)	10/1/2011 12:39:13 AM
From: Spekulatius	1 Recommendation Read Replies (1) of 78673

>>leee! u are hitting the nail on its head! BAC is doing well and making money in 5 of the 6 divisions.. If they file chap 11 for Countrywide or do a prepackaged, then its possible their equity will trade much higher.<< Declaring bankruptcy of an significant subsidiary for a financial cooperation is not a minor issue, because confidence is the most important asset of a financial institution and a bankruptcy is not exactly inspiring confidence.. There is a still a question if Countrywide can be ringfenced and an attempt to bankrupt if will certainly be contested by numerous parties that have claims against countrywide (debtors, mortgage holders etc.), as well as regulators. it would be akin to a nuclear option where an embattled person surrounded by thugs, pulls a handgrenate out of his pocket and threatens to pull the trigger. My thinking is that the threat to pull the nuclear option is more viable than executing it and may lead the opposing party to keep their claims and specifically the putbacks at a reasonable level. My sense is that this talk about Countrywide bankruptcy is more a threat than an real option, since the fallout is unforeseeable. Just my opinion of course.

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