Letters to the Editor
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Plenty of intrigue
Moody's upgraded Countrywide, after the BAC offer, then downgraded BAC. Moody's is 17% owned by Berkshire, and Berkshire has a sizable stake in BAC. The commentators were mostly incredulous. Why would BAC overpay for Countrywide? Probably because they knew they would realize an immediate benefit from the upgrade, as far the deal was concerned. BAC and Moody's are locked in a lovers embrace. According to the Economist Moody's and Fitch are about 80% of this market, and cross investment calls the integrity of these rating agencies into question. In the wake of the most recent meeting of the President's Working Group, the issue of government intervention also become an issue. Not allowing Countrywide to go bankrupt would send a message to the markets. Either BAC got the wink and the nod, or they feel pretty sure that the administration will cover their back. And as the article suggests, BAC could be the largest bank left standing, as some analysts feel pretty sure that Bear will go down this year, and Citi next. Enter Warren Buffett, who is not adverse to losing money. Recall JP Morgan put his fortune to work in the 29' crash, trying to put a floor under the market. It was a futile gesture.