Bank of America's $160 million windfall

Yeah, they lost $2 billion on Countrywide stock by investing without hedges at $18 in August. But it looks like they might get $160 million back.

Today, Countrywide filed the merger agreement with the SEC, and here it is for all to see. As we expected, Bank of America dictated the terms to a desperate orange midget. If the deal falls apart for any of a very large number of reasons, Countrywide owes B of A a $160 million termination fee. There is no termination fee under any circumstances going the other direction.

The market doesn't think this deal is done. Countrywide closed at $5.48 today, an 18.5% discount to the value of the deal based on B of A's closing price.

B of A got a free option to look at CFC's books for several months. And if it finds anything inaccurate in CFC's 40 pages of representations and warranties, it can walk away with $160 million.

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