8.23.2007

The Wall Street Journal's decline continues

A letter to the editor:

Dear Sirs:

I read today's BreakingViews article "BofA's Countrywide Gamble" on wsj.com.

I understand the cost-driven need to bring third-party content into the Journal, but this sort of mindless commentary is beneath the standard set by the Journal's proud heritage.

It is naive to believe that BofA is not hedging this transaction via short sales, swaps, or options.

If they hedge it, it's a free half billion dollars, with the added bonus of the interest rate spread between the 7.25% they receive on the preferred and the 3% they'd pay shorting the common.

Unhedged, it's a huge gamble.

If BofA did not hedge this, they are almost criminally negligent with shareholder funds, passing up a free-money, riskless-arbitrage deal for a riverboat gamble.

The credulous reporting of BofA's extortionate terms as a vote of confidence in Countrywide demeans the stature of the Wall Street Journal.

Regards,

W.C. Varones

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