Well, I can smell blood in the water, and apparently B of A could as well. Yesterday’s late announcement that B of A would pick up $2B of Countrywide’s preferred stock (that means that if Countrywide goes under, preferred stock holders have access to assets) and the deal funded today.  Good pick up for BofA as Countrywide is the nation’s biggest loan servicing company I believe.  I hope the idea of the country’s largest residential mortgage lender being in serious trouble has your attention.

In other news, the Fed lowered the Discount Window Rate from 6.25% to 5.75% in an emergency session last week after announcing they would not change it…interesting, I wonder who called them to change their minds.  They also increased the amount of time banks can borrow from the window to 30 days, probably more significant than lowering the discount rate. Comparing this to the Fed Funds Rate (the rate that banks borrow from each other) for 30-day money @ 5.5%, and you can see that this makes letting other banks borrow money from you, if you are a bank, more palatable.  Personally, I think this is pretty irresponsible and almost as irresponsible as Senator Chris Dodd’s comments the other night on Hardball. I didn’t write anything about his blaming the vast majority of the mortgage market problems on mortgage brokers because I was pretty pissed. I think what he said is irresponsible and shows that he is no different than the rest of the BS finger pointers looking for a scapegoat on Capitol Hill. The really crappy part is that he chairs the Banking, Housing and Urban Affairs Committee up there. More proof that we simply need to kick all of the people in Congress out of office and start from scratch.

[tags]BofA, Countrywide, Banking, Fed, FOMC, Discount Rate, Fed Funds Rate, Chris Dodd[/tags]

A great write up on the recent Fed action and the difference between the Discount Rate and the Federal Funds Rate.