The scent of blood is in the water. As the sharks continue to circle, Bank of America (BofA) reportedly is considering taking drastic steps to protect itself from the tsunami of lawsuits continually flooding the company in the wake of the Countrywide Financial Corp. takeover.
A group of people with knowledge of BofA’s corporate strategy told Bloomberg in a story posted today that the beleaguered bank would consider having the business unit file for bankruptcy if litigation losses threaten to topple the parent company.
Because BofA kept a separate legal identity for Countrywide after the acquisition in 2008, the bank has the option of enlisting court protection.
While a filing is not currently on their radar, the sources recognized that BofA could use the threat as leverage against plaintiffs seeking refunds on bad mortgages. A Countrywide bankruptcy could halt legal proceedings and consolidate litigation into one court that would divide Countrywide’s remaining assets for creditors, the Bloomberg article says.