S&P downgrades BofA

You kind of saw this one coming. Bank of America is crazy to take Countrywide Financial’s balance sheet onto its books. Apparently, S&P Equity Research agrees and correctly downgraded BofA to a sell rating because of the risk.

Note: Oppenheimer’s Meredith Whitney expects BofA to eventually be forced to cut its divided.

S&P said

“We take unfavorable note of the large Countrywide option-adjustable rate mortgage portfolio that Bank of America will inherit, since we believe this portfolio has yet to be stress tested.”
MarketWatch, 20 Jun 2008

Stay tuned.

Hat tip to CalculatedRisk

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