Senator Chuck Schumer must be very pleased, indeed.
David Sambol, Countrywide’s COO and the man who was supposed to lead the soon-to-be combined BofA/Countrywide mortgage business is “retiring.”
(“Right.”)
The reins of a restructured consumer banking business will instead be led by three BofA executives – mortgage chief Barbara Desoer, consumer bank president Liam McGee, and credit card lending chief Bruce Hammond.
“These changes reflect our commitment to aligning our best talent to our greatest growth opportunities,” BofA chief executive Ken Lewis said in an innocuously-titled press release.
Under the previous arrangement, Bank of America would have paid Sambol as much as $28m to stay with the merged company for three years. Those terms didn’t go down so well with Countrywide’s numerous detractors, notably Senator Chuck Schumer, who back in March described Sambol as “one of the focal points of what has caused this recession. . . Having the chief cook and bottle washer in charge is a mistake.”
Countrywide’s shares (CFC) spiked as much as 6 per cent immediately after the release was issued, as investors interpreted the appointments as a renewed commitment from BofA to complete the merger.
The news also cheered bond holders, who were rattled earlier this month when the investment bank said it might not guarantee $38.1bn of Countrywide’s debt after taking over the troubled mortgage lender. Five-year credit default swap contracts on Countrywide’s outstanding debt tightened by 70bp from 390bp before the announcement, according to broker Phoenix Partners Group.
BofA’s shares (BAC) were largely unchanged.
Related links:
Analyst says BofA should “completely walk away” from Countrywide deal – FT
Countrywide directors must face suit by shareholders – NY Times