The ongoing credit crunch was coming to a head Friday as former giants of the financial-services industry, now battered into submission, were forced into taking the sellout route.

The pulped

Countrywide

( CFC), for instance, will indeed

sell itself to

Bank of America

(BAC) - Get Report

. As disclosed this morning, BofA agreed to pay around $4 billion for the nation's biggest mortgage lender, or 0.1822 BofA shares for each Countrywide share.

Back in August, BofA

helped buoy the firm a bit by buying nonvoting convertible preferred Countrywide stock worth $2 billion.

The buyout's per-share dollar amount comes to $7.16, well below yesterday's tremendous $7.75 finish -- a 51% spike spurred by

The Wall Street Journal's

merger story break. That closing price, moreover, had essentially represented a return to relatively normal levels following the prior couple of days' massive losses, which were set off by

bankruptcy rumors and word of

more than doubled foreclosures in December.

Accordingly, Countrywide shares were in retreat with a recent 16% loss at $6.51. Shares of BofA, which expects the deal to begin boosting earnings next year, were off 1.2% to 38.85.

In

another potential bombshell deal, the mortgage-heavy

Washington Mutual

(WM) - Get Report

climbed after

CNBC

reported that the bank is in "very preliminary" takeout discussions with

JPMorgan Chase

(JPM) - Get Report

.

Mortgage woes have had WaMu shares sliding steadily downward since the summer, especially since the dispatch of

dismal third-quarter results in October and the following month's

accusation, courtesy of New York Attorney General Andrew Cuomo, that it had

schemed to inflate house appraisals. December's revelations of a capital-boosting

dividend slashing and a

stock offering didn't help, either.

Today, WaMu shares extended on yesterday's Countrywide inspired leap to add 70 cents, or 4.9%, to $14.86 in recent trading. That, along with a number of rallying banks, had the KBW Bank Index bouncing 1.1% to 84.71 to sharply outperform the major indices. JPMorgan, another component, was hugging the flat line.

Also joining the acquisition party was

AmCOMP

( AMCP), a small Florida-based insurer. Shares soared nearly 40% after

Employers Holdings

(EIG) - Get Report

agreed to pick it up for $12.50 a share in cash. In total, the deal is worth $230 million, including debt assumption, and it should close in the second quarter. AmCOMP shares added $3.29 to $12.04 as Employers rose 1.4%.

But among Friday's big financial losers was

American Express

(AXP) - Get Report

, which said it will

take a roughly $440 million pretax hit in the fourth quarter due to rising loan delinquencies. After taxes, the charge should come to around $275 million, and it's expected to strain continuing operations income to between 70 cents and 73 cents a share. Thomson Financial's analyst estimates average at 87 cents a share, excluding items. Shares of the New York credit card issuer were off $5.78, or 11.8%, to $43.14.

Fourth-quarter results will likewise suffer at

Provident Bankshares

( PBKS) as the Baltimore bank takes a sizable charge from writing down "a significant portion" of its portfolio of real estate investment trust preferred securities -- $28.9 million, or 91 cents a share. The bank also vaulted its loan-loss provision to $13.5 million from last quarter's $7.5 million, which should ultimately chop 11 cents a share off its quarterly earnings. Shares were sinking 9% to $17.27.

Elsewhere,

AllianceBernstein

(AB) - Get Report

sheared about 30 cents off its 2007 profit guidance, suggesting a range of between $4.20 to $4.50 a share. The Street is looking for $4.63 a share. The New York investment manager blames this largely on "much lower-than-expected" hedge fund performance fees -- echoing the reasons behind its last outlook slashing in October -- as well as on investment losses associated with employee compensation plans. Shares were losing $6, or 7.8%, to $71.01.

And

BankUnited

( BKUNA) lost 6.8% on a Sandler O'Neill downgrade to sell. Shares of the Florida bank were down 34 cents at $4.66.

More broadly, the

NYSE

Financial Sector Index was down around 43 points, or 0.5%, to 7,881.26 after briefly meandering around the flat line.