Today's Gamesmanship
What a chess game that is getting played out these days! It is almost unbelievable.
Okay, this morning news hits the wires about Citi, Bank of America, JP Morgan Chase, and Wachovia each borrowing $500 million from the Fed discount window. This action was "spun" as symbolic.
Then, after the equity markets closed for the day Bank of America is making a $2 BILLION investment in Countrywide.
Is your math as good as mine? 500 million times 4 equals $2 BILLION!
Did Bank of America (Citi, JP Morgan, and Wachovia) just do the Fed's dirty work and pick up the spread in between? They borrowed at 5.75% from the Fed discount window and lent to Countrywide at 7.25%. That's a cool $30 million to that 1.5 point spread.
Didn't Countrywide just borrow $11.5 billion on last Thursday? Where did that cash go?
Make no mistake about it, Countrywide is distress. The Fed is trying to prop it up. Only time will tell if their efforts and subterfuge will work.
My main question is, who do they think they are fooling? Not the readers of The Mortgage Manifesto!
Comments