January 29, 2008 / 3:18 AM / 11 years ago

Countrywide deal spurred by crackdown worries-WSJ

NEW YORK, Jan 28 (Reuters) - Countrywide Financial Corp’s CFC.N decision to sell itself to Bank of America Corp (BAC.N) was driven in part by fear of potential crackdowns by regulators, the Wall Street Journal reported on its Web site on Monday.

The largest U.S. mortgage lender had been convulsed by mounting losses and a lack of access to capital. But a more pressing danger was increased pressure from regulators, politicians and credit-rating firms, the paper said.

These concerns prompted Countrywide Chief Executive Angelo Mozilo to call Bank of America in December, the paper said, initiating talks that led to a $4 billion deal announced on Jan. 11.

Countrywide representatives could not be reached immediately for comment.

In November, New York Sen. Charles Schumer wrote a letter to regulators of the Federal Home Loan Banks, arguing a surge in Countrywide’s extensive borrowing posed a risk to the regional bank lending system.

Rapid growth in consumer bank deposits at Countrywide meanwhile raised the potential of greater scrutiny from the Federal Deposit Insurance Corp. Countrywide also was dealing with a series of investigations by state attorneys general and the Securities and Exchange Commission. (Editing by Michael Urquhart)

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