This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Bank of America: Countrywide 'Hustle' Winner

Stocks in this article: FB BAC NYB I:BKX

NEW YORK ( TheStreet) -- Bank of America (BAC) shares pulled back by only a nickel to close at $9.31, despite another high-profile lawsuit against the company, this time by U.S. Justice Department.

The lawsuit perfectly illustrates the lingering material risk and headline risk from former Bank of America CEO Ken Lewis's disastrous decision to purchase Countrywide Financial in July 2008, when it was already apparent that the residential real estate bubble had burst.

Of course, the Justice Department's timing works very well in the election season, once again, pitting the government against the banks. According to the complaint, "Countrywide and later Bank of America, following the acquisition of Countrywide in 2008, implemented a new origination process called 'Hustle,' which was intentionally designed to process loans at high speed and without quality checkpoints, and which generated thousands of fraudulent and otherwise defective residential mortgage loans sold to Fannie Mae (FNMA) and Freddie Mac (FMCC) that later defaulted causing over $1 billion dollars in losses and countless foreclosures."

The branding of an internal loan approval process as "Hustle" perfectly illustrates the gleeful sales culture associated with an asset bubble.

Anthony Sabino -- a professor at John's University's Peter J. Tobin College of Business -- expressed sympathy for Bank of America CEO Brian Moynihan, saying that "no sooner than he settles one piece of litigation as part of the fallout of the Great Recession (i.e., the flawed merger with Merrill Lynch), another monstrous lawsuit rises up to take its place." Sabino went on to say that "the news is not all that horrific," since the lawsuit was expected, and "Moynihan has been doing a pretty good job of tackling these problems head on and resolving them. Odds are he will do the same here."

The broad indexes saw slight declines on Wednesday, following Tuesday's painful session, despite another strong housing report, with the Census Bureau estimating that sales of new single-family homes in September rose to a seasonally adjusted annual rate of 389,000, increasing 5.7% from a revised August rate of 368,000, and 27.1% from the rate of 306,000 in September 2011.

1 of 5

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs