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FEDERAL RESERVE SYSTEM

Bank of America Corporation

Charlotte, North Carolina

Order Approving the Acquisition of a Savings Association

and Other Nonbanking Activities


Bank of America Corporation ("Bank of America"), a financial holding
company within the meaning of the Bank Holding Company Act ("BHC Act"), has
requested the Board's approval under sections 4(c)(8) and 4(j) of the BHC Act and
section 225.24 of the Board's Regulation yl to acquire Countrywide Financial
Corporation ("Countrywide"), Calabasas, California, and thereby indirectly acquire
Countrywide's subsidiary savings association, Countrywide Bank, FSB ("Countrywide
Bank"), Alexandria, Virginia. 2 In addition, Bank of America has requested the Board's
approval to acquire indirectly certain other nonbanking subsidiaries of Countrywide and
thereby engage in the following activities: credit extension and loan servicing; real estate
and personal property appraisal; real estate settlement; credit bureau services; asset
management, servicing, and collection; acquiring debt in default; securities brokerage;
trust company functions; community development; and tax services in accordance with
section 225 .28(b) of the Board's Regulation Y. 3

I

12 U.S.C. §§ 1843(c)(8) and G); 12 CFR 225.24.

2 Bank of America has formed a wholly owned subsidiary, Red Oak Merger Corporation
("Red Oak"), for purposes of acquiring Countrywide. Countrywide will merge with and
into Red Oak, and Countrywide will become a subsidiary of Bank of America. In
connection with this proposal, Bank of America also has applied to acquire from its
subsidiary bank, Bank of America, National Association ("BA Bank"), Charlotte,
North Carolina, 20,000 shares of Series B Nonvoting Convertible Preferred Stock of
Countrywide, which is convertible at the option of the holder into approximately
15.7 percent of Countrywide's voting common stock.

See the appendix for a listing of these subsidiaries and their respective activities.
Bank of America also proposes to acquire certain other Countrywide subsidiaries in
accordance with section 4(k) of the BHC Act, 12 U.S.C. § 1843(k).
3

-2­

Bank of America, with total consolidated assets of $1.7 trillion, is the
largest depository organization in the United States measured by deposits, controlling
deposits of approximately $711.7 billion, which represent approximately 10.04 percent
of the total amount of deposits of insured depository institutions in the United States. 4
Bank of America controls eight insured depository institutions 5 that operate in
thirty-one states and the District of Columbia.
Countrywide, with total consolidated assets of approximately $199 billion,
is the 17 th largest depository organization in the United States, controlling deposits of
approximately $61.7 billion, which represent less than 1 percent of the total amount of
deposits of insured depository institutions in the United States. Countrywide Bank,
Countrywide's only subsidiary insured depository institution, is located in Texas and
Virginia.
On consummation of the proposal, Bank of America would remain the
largest depository organization in the United States, with total consolidated assets of
approximately $1.9 trillion. Bank of America would control deposits of approximately
$773.4 billion, representing approximately 10.91 percent of the total amount of deposits
of insured depository institutions in the United States.

Asset and nationwide deposit-ranking data are as of December 31, 2007. In this
context, insured depository institutions include commercial banks, savings banks,
and savings associations. As explained below, the nationwide deposit cap restriction
contained in section 3(d) of the BHC Act does not apply to this transaction because
the transaction involves the acquisition of a savings association and not a bank.
4

BA Bank is Bank of America's largest subsidiary depository institution, as measured
by both assets and deposits. Bank of America's other subsidiary depository institutions
are Bank of America Oregon, National Association ("BA Oregon"), Portland, Oregon;
Bank of America California, National Association ("BA California"), San Francisco,
California; Bank of America Rhode Island, National Association ("BA Rhode Island"),
Providence, Rhode Island; Bank of America Georgia, National Association ("BA
Georgia"), Atlanta, Georgia; FIA Card Services, N.A., Wilmington, Delaware; LaSalle
Bank National Association, Chicago, Illinois; and LaSalle Bank Midwest National
Association, Troy, Michigan.
5

-3­
Factors Governing Board Review of the Transaction
The Board previously has determined by regulation that the operation of
a savings association by a bank holding company and the other nonbanking activities
for which Bank of America has requested approval are closely related to banking for
purposes of section 4(c)(8) of the BHC Act. 6 The Board requires that savings
associations acquired by bank holding companies or financial holding companies
conform their direct and indirect activities to those permissible for bank holding
companies under section 4(c)(8) of the BHC Act. 7 Bank of America has committed
that all the activities of Countrywide Bank and the other nonbanking subsidiaries of
Countrywide that it proposes to acquire will conform to the requirements for permissible
activities under section 4 of the BHC Act and Regulation Y.
Section 4U)(2)(A) of the BHC Act requires the Board to determine that
the proposed acquisition of Countrywide Bank and Countrywide's other nonbanking
subsidiaries "can reasonably be expected to produce benefits to the public, such as
greater convenience, increased competition, or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interests, or unsound banking practices.,,8 As part
of its evaluation under these public interest factors, the Board reviews the financial
and managerial resources of the companies involved, the effect of the proposal on
competition in the relevant markets, and the public benefits of the proposa1. 9 In acting
on a notice to acquire a savings association, the Board also reviews the records of

6

12 CFR 225.28(b)(1), (2), (4)(ii), (5), (6)(vi), (7)(i), and (12).

7

12 CFR 225.28(b)(4)(ii) and 225.86.

8 12 U.S.C. § 1843U)(2)(A).
See 12 CFR 225.26; see,~, Wachovia Corporation, 92 Federal Reserve Bulletin
Cl38 (2006); BancOne Corporation, 83 Federal Reserve Bulletin 602 (1997).
9

- 4­

performance of the relevant insured depository institutions under the Community
Reinvestment Act ("CRA,,).l0
Public Comment on the Proposal
Notice of the proposal, affording interested persons an opportunity to
submit comments, has been published in the Federal Register (73 Federal Register 11,419
(March 3, 2008) and 73 Federal Register 18,279 (April 3,2008)), and the time for filing
comments has expired. The Board extended the initial period for public comment to
accommodate the broad public interest in this proposal, providing interested persons
more than 50 days to submit written comments.
Because of the extensive public interest in the proposal, the Board held
public meetings in Chicago, Illinois, and Los Angeles, California, to provide interested
persons an opportunity to present oral testimony on the factors that the Board must
review under the BHC Act. ll Approximately 150 people testified at the public meetings,
and many of those who testified also submitted written comments.
In total, approximately 770 individuals and organizations submitted
comments on the proposal through oral testimony, written comments, or both.
Commenters included members of Congress, a state government agency, community
groups, nonprofit organizations, customers of Bank of America or Countrywide, and
other interested organizations and individuals.
A large number of commenters supported the proposal. Many of the
commenters in support of the proposal commended Bank of America for its commitment
to local communities and described favorable experiences with the affordable mortgage,

10

12 U.S.C. § 2901 et seq.

II The Board held the Chicago public meeting on April 22, 2008, and the Los Angeles
public meetings on April 28 and 29, 2008. A few commenters requested that the Board
hold additional public meetings in New York and in other communities affected by
the acquisition, as well as extend the public comment period. The Board believes,
however, that holding public meetings in Chicago and Los Angeles, as well as giving
all commenters an extended period to submit written comments, provided sufficient
opportunity for interested persons to present relevant information to the Board.

-5­
small business, and community development programs of the organization. Commenters
also praised the willingness of Bank of America to provide CRA-related products and
services, such as affordable mortgage products, educational seminars, and loan funds,
to support community development activities. In addition, commenters praised Bank
of America's charitable contributions and noted that officers and employees of the
organizations frequently provided valuable services to community organizations as
board members and volunteers.
A significant number of commenters opposed the proposal, requested that
the Board approve the proposal subject to certain conditions or expressed concerns about
the proposal. 12 Many commenters were concerned about the impact of the proposal on
Bank of America's share of national deposits. Commenters expressed their belief that,
if approved by the Board, Bank of America's acquisition of Countrywide would violate
the statutory restriction on interstate bank acquisitions contained in section 3(d) of the
BHC Act. 13 Many commenters also believed that the acquisition would reduce

12 Approximately 440 comments were submitted in the form of one of two substantially
identical e-mail messages.

A large number of commenters have expressed concern about the impact of
the proposal on the deposit cap provision of section 3(d) of the BHC Act. The
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Riegle-Neal
Act"), Pub. L. 103-328 (1994), codified at 12 U.S.c. § 1842(d), provides that the
Board may not approve any application for the interstate acquisition of a bank if
consummation of the acquisition would result in the applicant controlling more than
10 percent of the total amount of deposits of insured depository institutions in the
United States. Countrywide Bank is chartered as a federal savings bank under the
Home Owners' Loan Act. 12 U.S.C. § 1461 et seq. Section 2(c)(2)(B) of the
BHC Act exempts federally chartered savings associations and savings banks, as
defined by section 2U) of the BHC Act, from the definition of "bank." As a result,
Countrywide Bank is not a "bank," for purposes of the BHC Act and the nationwide
deposit cap contained in the BHC Act. Therefore, the provisions of the Riegle-Neal
Act prohibiting the Board from approving an application to acquire a bank if
consummation of the acquisition would result in the applicant exceeding the national
deposit cap do not apply to the present notice to acquire Countrywide Bank and the
other nonblank subsidiaries of Countrywide. After consummation of the proposal,
however, the calculation of Bank of America's total deposits would include Countrywide
Bank's deposits for purposes of calculating compliance with the nationwide deposit cap
13

-6­
competition in the mortgage origination and servicing markets and substantially increase
concentration in the banking and financial services industry. In addition, commenters
expressed concern about Bank of America's plans for integrating Countrywide's
operations, business model, and management. Many commenters urged Bank of
America to retain Countrywide staff to help adequately address borrowers' needs, and
some commenters suggested that Bank of America retain Countrywide's main office
and mortgage servicing headquarters.
Several commenters expressed concerns about the safety and soundness
of the proposed acquisition, arguing that Countrywide's current condition may unduly
strain Bank of America's financial and managerial resources. Commenters also
expressed concerns about the effect of Countrywide's legal exposures on Bank of
America's resources, in light of lawsuits and investigations involving Countrywide.
The majority of commenters urged Bank of America to develop a loss-mitigation plan
for dealing appropriately with distressed borrowers or borrowers facing foreclosure.
Many commenters criticized Countrywide's lending and servicing
operations and other business practices, focusing primarily on Countrywide's presence
in the subprime lending market and its wide use of nontraditional mortgage products.
A significant number of commenters criticized the performance of Bank of America and
Countrywide under the CRA. Some of these commenters criticized Bank of America's
community development and philanthropic initiatives. Other commenters expressed
concern about the impact ofthe acquisition on Bank of America's commitment to
CRA-related initiatives and its future performance under the CRA. In addition, some
commenters expressed concern about Bank of America's and Countrywide's records
of lending to minorities.
In evaluating the statutory factors under the BHC Act, the Board carefully
considered the information and views presented by all commenters, including the

requirement in connection with any subsequent application by Bank of America to
acquire a bank pursuant to section 3 of the BHC Act or by one of its subsidiary banks
to merge with a bank pursuant to the Bank Merger Act.

-7­
testimony at the public meetings and the written submissions. The Board also considered
all the information presented in the notice and supplemental filings by Bank of America,
various reports filed by the relevant companies, publicly available information, and
other information and reports. In addition, the Board reviewed confidential supervisory
information, including examination reports on the depository institution holding
companies and the depository institutions involved and other information provided by
the relevant federal financial institution supervisory agencies ("federal supervisory
agencies"), the Securities and Exchange Commission ("SEC"), and the Department of
Justice ("DOJ"). After a careful review of all the facts of record, and for the reasons
discussed in this order, the Board has concluded that the statutory factors it is required
to consider under the BHC Act are consistent with approval of the proposal.
Competitive Considerations
The Board has considered carefully the competitive effects of Bank of
America's acquisition of Countrywide, including the acquisition of Countrywide Bank
and the other Countrywide nonbanking subsidiaries, in light of all the facts of record.
A. Acquisition of a Savings Association
Bank of America and Countrywide have subsidiary insured depository
institutions that compete directly in two banking markets, Washington, D.C., and
Fort Worth, Texas. 14 The Board has reviewed carefully the competitive effects of the
proposal in both markets in light of all the facts of record, including public comment
on the proposal. In particular, the Board has considered the number of competitors that
would remain in the markets, the relative shares of total deposits in depository institutions
in each market ("market deposits") controlled by Bank of America and Countrywide, 15
Countrywide Bank operates only two retail branches, one in Alexandria, Virginia,
and one in Fort Worth, Texas. Countrywide Bank primarily delivers its products and
services via Internet, call centers, and approximately 700 financial lending centers.
It focuses on providing residential mortgage credit.
14

Deposit and market share data are as of June 30, 2007, and are based on
calculations in which the deposits of thrift institutions are included at 50 percent.
The Board previously has indicated that thrift institutions have become, or have the
potential to become, significant competitors of commercial banks. See,~, Midwest
15

-8­

the concentration levels of market deposits and the increase in those levels as measured
by the Herfindahl-Hirschman Index ("HHI") under the DOJ Merger Guidelines
("DOJ Guidelines"),16 and other characteristics of the markets.
Consummation of the proposal would be consistent with Board precedent
and within the thresholds in the DOJ Guidelines in the Washington, D.C. banking
market. 17 On consummation, this market would remain unconcentrated, as measured
by the HHI, and numerous competitors would remain in the market. 18

Financial Group, 75 Federal Reserve Bulletin 386,387 (1989); National City

Corporation, 70 Federal Reserve Bulletin 743,744 (1984). Thus, the Board regularly

has included thrift deposits in the market share calculation on a 50 percent weighted

basis. See,~, First Hawaiian, Inc., 77 Federal Reserve Bulletin 52,55 (1991). In

the market share calculations in this case, the Board weighted Countrywide's deposits

at 50 percent pre-acquisition and at 100 percent post-acquisition to reflect the resulting

control of such deposits by a commercial banking organization.

16 Under the DOJ Guidelines, a market is considered unconcentrated if the

post-acquisition HHI is under 1000, moderately concentrated if the post-acquisition

HHI is between 1000 and 1800, and highly concentrated if the post-acquisition

HHI exceeds 1800. The DOJ has informed the Board that a bank merger or

acquisition generally will not be challenged (in the absence of other factors indicating

anticompetitive effects) unless the post-acquisition HHI is at least 1800 and the

acquisition increases the HHI by more than 200 points. The DOJ has stated that the

higher-than-normal HHI thresholds for screening bank mergers and acquisitions for

anticompetitive effects implicitly recognize the competitive effects of limited-purpose

and other nondepository financial entities.

17 The Washington, D.C. market is defined as the District of Columbia; Calvert,

Charles, Frederick, Montgomery, and Prince George's Counties in Maryland;

Arlington, Clarke, Culpeper, Fairfax, Fauquier, King George, Loudoun, Prince William,

Spotsylvania, Stafford, and Warren Counties in Virginia; the cities of Alexandria,

Fairfax, Falls Church, Fredericksburg, Manassas, and Manassas Park in Virginia; and

Berkeley and Jefferson Counties in West Virginia.

18 Bank of America operates the second largest depository institution in the

Washington, D.C. banking market, controlling deposits of approximately $21.6 billion,

which represent approximately 14.6 percent of market deposits. Countrywide operates

the 42 nd largest depository institution in the market, controlling deposits of approximately

$380 million, which represent less than 1 percent of market deposits. On consummation,

Bank of America would remain the second largest depository institution in the market,

controlling deposits of approximately $22 billion, which represent approximately


-9­
The structural effects of the proposal in the Fort Worth, Texas banking
market ("Fort Worth banking market"),19 as measured by the HHI on the basis of
deposits, would substantially exceed the DOJ Guidelines. According to the Summary
of Deposits ("SOD") as of June 30, 2007, with the deposits of Bank of America and
Countrywide fully weighted, Bank of America operates the third largest insured
depository institution in the Fort Worth banking market, controlling deposits of
approximately $3 billion, which represent approximately 3.7 percent of market
deposits. 2o Countrywide operates the largest insured depository institution in the
market, controlling deposits of approximately $60.2 billion, which represent
approximately 73.2 percent of market deposits. 21 On consummation, Bank of America
would operate the largest insured depository institution in the market, controlling deposits
of approximately $63.3 billion, which represent approximately 76.9 percent of market
deposits. The HHI would increase by 539 points to 5962. 22
In accordance with its precedent when the HHI screening measurement
exceeded DOJ Guidelines, the Board has conducted an in-depth review of the
competitive effects of an acquisition. As the HHI increases or the change in the
HHI resulting from a proposal becomes larger, increasingly stronger mitigating factors

14.8 percent of market deposits. Approximately 118 depository institutions would
remain in the Washington, D.C. banking market. The HHI would increase by 5 points
to 877.
19 The Fort Worth banking market is defined as Tarrant, Johnson, Parker (excluding
Mineral Wells), and Wise Counties in Texas.
20 When Countrywide Bank's deposits are weighted at 50 percent pre-acquisition,
Bank of America controls deposits representing approximately 5.8 percent of market
deposits.
21 When Countrywide Bank's deposits are weighted at 50 percent pre-acquisition,
Countrywide Bank controls deposits representing approximately 57.4 percent of
market deposits.
22 When Countrywide Bank's deposits are weighted at 50 percent pre-acquisition
and at 100 percent post-acquisition, the HHI increases by 2470 points to 5962.

- 10­

are required to support a determination that the competitive effects of the proposal are
not significantly adverse.
Bank of America asserts that inclusion of most deposits that were received
and booked at Countrywide Bank's only branch in the Fort Worth banking market
("Fort Worth Branch") in calculations of market share indices for this transaction would
distort the measures of the competitive effect of the proposal on the Fort Worth banking
market. Bank of America has argued that, for purposes of evaluating the proposal's
competitive effect in the Fort Worth banking market, the Board should exclude those
deposits received by the Fort Worth Branch from various Countrywide affiliates and
offices nationwide that are outside the Fort Worth banking market. Approximately
$60.2 billion of the deposits in the Fort Worth Branch are escrow deposits, brokered
deposits, commercial deposits from title insurance and investment companies throughout
the country, and deposits forwarded to the Fort Worth Branch from drop-boxes in
Countrywide's national network of nonbanking offices. These national business-line
deposits were previously maintained at Countrywide Bank's main office in Alexandria
until they were transferred to the Fort Worth Branch in March 2005 to take advantage
of lower state franchise taxes. Less than $281 million, representing less than 1 percent,
of those deposits booked at the Fort Worth Branch were in accounts of customers with
addresses in the Fort Worth banking market.
In conducting its competitive analysis in previous cases, the Board
generally has not adjusted its market share calculations to exclude out-of-market deposits
because all deposits are typically available to support lending and other banking activities
at any location. The Board has adjusted the market deposits held by an applicant to
exclude specific types of deposits only in rare situations, such as when evidence
supported a finding that the excluded deposits were not legally available for use in that
market, and data were available to make comparable adjustments to the market shares
for all other market participants. 23 The Board also has adjusted deposit data in the rare
circumstance where there was strong evidence that a depository organization moved its
23

See First Security Corp., 86 Federal Reserve Bulletin 122 (2000).

- 11 ­
national business-line deposits to a particular branch for business reasons unrelated
to its efforts to compete in that market and did not use these deposits to enhance its
competitive ability in that market or to manipulate SOD data used in competitive
analyses by a federal supervisory agency.24
The Board has conducted a more detailed analysis of Countrywide's
activities in the Fort Worth banking market to evaluate whether the increase in
concentration in the market, as measured by the HHI based on SOD data, overstates
the anticompetitive effects of the proposal in the market. The Fort Worth Branch of
Countrywide Bank is not a conventional retail branch. It is in a large office park building
that is occupied primarily by Countrywide's national mortgage loan processing facilities.
Only one teller window capable of handling retail banking transactions operates at that
location. The branch accepts cash deposits but dispenses cash only by means of an
automated teller machine ("ATM"). As noted, almost all deposits booked at the branch
come from brokered deposits, deposits related to its mortgage operations, or other
deposits from locations across the United States other than the Fort Worth banking
market.
Countrywide placed the national business-line deposits in the Fort Worth
Branch for business reasons unrelated to Countrywide's efforts to compete in the
Fort Worth banking market. There also is no evidence in the record that Countrywide
moved the deposits to Fort Worth from another branch in an attempt to manipulate the
SOD data used for competitive analyses by the appropriate federal supervisory agency.
Moreover, although Countrywide holds approximately $60.2 billion in deposits in
the Fort Worth market based on SOD data, this office holds loans totaling only
approximately $30.1 million, which represents a loan-to-deposit ratio of 0.05 percent
for Countrywide Bank in the Fort Worth banking market. This unusually low
loan-to-deposit ratio is consistent with the conclusion that the SOD deposit data

24 See J.P. Morgan Chase & Co., 90 Federal Reserve Bulletin 352,355 (2004).

- 12 ­

significantly overstate Countrywide's competitive presence in the Fort Worth banking
market. 25
The Board also examined other aspects of the structure of the Fort Worth
banking market. After consummation of the proposal, a large number of competitors
would remain in the market. Seventy-three depository institutions would continue to
compete in the Fort Worth banking market.
Based on a careful review of these and all other facts of record, the Board
concludes that the increase in concentration, as measured by the HHI using SOD data
without adjustment, overstates the competitive effect of the proposal in the Fort Worth
banking market. 26 The Board also concludes that, with appropriate adjustment and after
considering the structure of the market, consummation of the proposal would have no
significantly adverse effect in the Fort Worth banking market.
B. Other Nonbanking Activities
The Board also has carefully considered the competitive effects of Bank
of America's proposed acquisition of Countrywide's other nonbanking subsidiaries
and activities in light of all the facts of record. Bank of America and Countrywide
both engage in the following activities: mortgage lending and other credit extension
originations and servicing; real estate and personal property appraisal; real estate
settlement; credit bureau services; asset management, servicing, and collection; acquiring
debt in default; securities brokerage; community development; trust company functions;

Although Countrywide Bank's national business-line deposits may be excluded
from the Fort Worth banking market, the Board has nevertheless taken into account
the fact that these deposits were used to fund Countrywide's nationwide mortgage
operations.
25

If the deposits attributable to customers with addresses outside the Fort Worth
banking market were excluded from the calculation of its market concentration,
Countrywide Bank would have a market share of less than 1 percent and Bank of
America would remain the second largest insured depository institution in the market
on consummation of the proposal, controlling deposits of approximately $3.3 billion,
which represent approximately 14.8 percent of market deposits. The HHI would
increase 24 points to 900.
26

- 13 ­
and tax services. Some commenters expressed concern that the proposal would adversely
affect competition for mortgage lending in the United States.
Bank of America and Countrywide compete in the mortgage servicing
business. Countrywide is the largest mortgage servicer in the United States. The Board
previously has found that the geographic market for mortgage servicing is national in
scope. Although Bank of America would become the largest mortgage loan servicer in
the United States on consummation of the proposal, the mortgage servicing market would
remain unconcentrated and numerous competitors would continue to engage in mortgage
servicing. The HHI for this market would increase by no more than 152 points to no
more than 882. 27
The geographic market for mortgage originations is less settled than for
mortgage servicing, but current market trends and evidence suggest that the appropriate
geographic market for mortgage originations also is national in scope. 28 This conclusion
is confirmed by analysis of the most recent Home Mortgage Disclosure Act ("HMDA")
data.

29

When taken as a whole, the HMDA data on mortgage originations strongly

suggest that the geographic market for mortgage originations is no longer local or
statewide but national in scope.
On consummation of this proposal, Bank of America would become the
largest mortgage loan originator in the nation. The proposed acquisition would increase

Bank of America is the seventh largest mortgage loan servicer in the United States
as of June 30, 2007. See American Banker, October 12,2007.
27

28 Earlier Board orders focused on the fact that long-distance mortgage origination
providers offered loan rates that were substantially higher than rates offered by local
sources for mortgage financing. This rate differential has decreased, however, as
consumers have access both directly and through mortgage brokers to lenders
nationwide.

29

S
12 U..C. § 2801 et seq.

- 14 ­

the HHI by no more than 244 points to no more than 962. The market would remain
unconcentrated with numerous mortgage originators. 3o
The Board also has considered the competitive effects of Bank of
America's proposed acquisition of the other nonbanking subsidiaries of Countrywide.
Most of the markets in which the nonbanking subsidiaries of Bank of America and
Countrywide compete are regional or national in scope and unconcentrated with
numerous competitors. Although community development, property appraisal, and
real estate settlement activities generally are conducted locally, there are numerous
providers of these services and neither Bank of America nor Countrywide control
significant shares of these markets. As a result, the Board expects that consummation
of the proposal would have a de minimis effect on competition for these services.
C. Views of Other Agencies/Conclusion on Competitive Considerations
The DOJ also conducted a detailed review of the probable competitive
effects of the proposal, including the acquisition of Countrywide Bank and the other
nonbanking subsidiaries of Countrywide. The DOJ has advised the Board that
consummation of the transaction would not likely have a significantly adverse effect
on competition in any relevant banking market, including the Washington, D.C. and
Fort Worth banking markets, or in any relevant market for the other proposed
nonbanking activities. The appropriate federal supervisory agencies have also
been afforded an opportunity to comment and have not objected to the proposal.
Based on all the facts of record, the Board concludes that consummation
of the proposed transaction, including the acquisition of Countrywide Bank and
Countrywide's other nonbanking subsidiaries, would not have a significantly adverse
effect on competition or on the concentration of resources in the Washington, D.C. and
Fort Worth banking markets, or in any other relevant banking or nonbanking activities
market. Accordingly, the Board has determined that competitive considerations are
consistent with approval.
As of June 30, 2007, Bank of America and Countrywide are, respectively, the fifth
largest and largest mortgage loan originators in the United States. See American Banker,
October 12, 2007.
30

- 15 ­

Financial and Managerial Resources
In reviewing the proposal under section 4 of the BHC Act, the Board
has considered carefully the financial and managerial resources of Bank of America,
Countrywide, and their subsidiaries, and the effect of the transaction on those resources.
This review was conducted in light of all the facts of record, including confidential
reports of examination, other supervisory information from the primary federal and
state supervisors of the organizations involved in the proposal, and publicly reported
and other financial information, including information provided by Bank of America
and Countrywide.
The Board has consulted with the Office of the Comptroller of the
Currency ("OCC") and the Office of Thrift Supervision ("OTS"), as the primary
federal supervisors of Bank of America's and Countrywide's respective subsidiary
depository institutions. Additionally, the Board has conferred with the SEC regarding
the securities activities of Bank of America and Countrywide.
The Board has also considered the public comments that relate to these
factors. Commenters expressed concern about the size of the combined organization
and whether it would present special risks to the federal deposit insurance fund or the
financial system in general. Several commenters expressed concerns over Countrywide's
risk-management systems, as well as concerns about Bank of America's ability to
effectively manage Countrywide's operations. 31 Moreover, several commenters
expressed concerns about existing and potential future investigations and lawsuits
filed against Countrywide and its executives related to Countrywide's operations. 32

31 Several commenters expressed general and specific concerns over retention of
Countrywide management staff and the existence of "golden parachute" payments
for certain Countrywide executives. On consummation, Bank of America's overall
organization will continue to be governed by its policies, procedures, and senior
executive leadership. The Board notes that "golden parachute" or indemnification
payments are subject to applicable federal regulations and may require approval by
appropriate supervisors. See 12 CFR 359.

The Board will continue to monitor pending investigations and litigation involving
Bank of America or Countrywide.
32

- 16 ­

In evaluating financial resources in expansionary proposals by banking
organizations, the Board reviews the financial condition of the organizations involved
on both a parent-only and consolidated basis, as well as the financial condition of the
subsidiary insured depository institutions and the organizations' significant nonbanking
operations. In this evaluation, the Board considers a variety of information, including
capital adequacy, asset quality, and earnings performance. In assessing financial
factors, the Board consistently has considered capital adequacy to be especially
important. The Board also evaluates the financial condition of the combined organization
at consummation, including its capital position, asset quality, and earnings prospects, and
the impact of the proposed funding of the transaction. In addition, the Board considers
the ability of the organization to absorb the costs of the proposal and the plans for
integrating operations after consummation.
The Board has considered carefully the financial factors of the proposal.
Bank of America and its subsidiary depository institutions are well capitalized and
would remain so on consummation of the proposal. In addition, Countrywide Bank
is well capitalized and would continue to be so after consummation of the proposal.
Based on its review of the record, the Board also finds that Bank of America has
sufficient financial resources to effect the proposal. The proposed transaction is
structured as a share exchange and would not increase the debt service requirements
of the combined company.
The Board also has considered the managerial resources of the
organizations involved and the proposed combined organization. The Board has
reviewed the examination records of Bank of America, Countrywide, and their
subsidiary depository institutions, including assessments of their management,
risk-management systems, and operations. In addition, the Board has considered
its supervisory experiences and those of the other relevant federal supervisory
agencies with the organizations and their records of compliance with applicable

- 17 ­
banking laws and with anti-money laundering laws. 33 Bank of America and its subsidiary
depository institutions are considered to be well managed. In addition, the Board has
considered carefully Bank of America's plans for implementing the proposal, including
its proposed risk-management systems after consummation. The Board also has
considered Bank of America's record of successfully integrating large organizations
into its operations and risk-management systems after acquisitions. Bank of America
will implement its risk-management policies, procedures, and controls at the combined
organization. Bank of America is devoting significant financial and other resources to
address all aspects of the post-acquisition integration process.
Based on all the facts of record, including a review of the comments
received, the Board has concluded that considerations relating to the financial and
managerial resources of the organizations involved in the proposal are consistent with
approval under section 4 of the BHC Act.
Records of Performance Under the CRA
As noted previously, the Board reviews the records of performance
under the CRA of the relevant insured depository institutions when acting on a notice
to acquire any insured depository institution, including a savings association. The
CRA requires the federal financial supervisory agencies to encourage insured
depository institutions to help meet the credit needs of the local communities in
which they operate, consistent with their safe and sound operation, and requires
the appropriate federal financial supervisory agency to take into account a relevant
depository institution's record of meeting the credit needs of its entire community,

33

Some commenters expressed concerns about Bank of America's relationship with
certain unaffiliated payday lenders. As a general matter, the activities of the consumer
finance businesses identified by the commenter are permissible and the businesses are
licensed by the states where they operate. Bank of America has stated that it conducts
substantial due diligence reviews of its customers who provide alternative financial
services, including reviews of anti-money laundering and Bank Secrecy Act compliance,
and that it does not play any role in the lending practices, credit review processes, or
other business practices of those firms.

- 18 ­

including low- and moderate-income ("LMI") neighborhoods, in evaluating bank
expansionary proposals. 34
The Board has considered carefully all the facts of record, including
reports of examination of the CRA performance records of the subsidiary banks of
Bank of America and Countrywide, data reported by Bank of America and Countrywide
under the CRA and the HMDA, other information provided by Bank of America,
confidential supervisory information, and public comments received on the proposal.
Approximately 160 individuals, organizations, and businesses submitted
comments or testified in support of the proposal. These commenters commended
Bank of America's record of performance under the CRA, particularly its sponsorship
of homebuyer education programs in LMI communities and its financial support for
community development and small business programs.
Approximately 610 individuals and groups expressed concerns in their
comments and testimony that included the mortgage and consumer lending records
of Bank of America and Countrywide and Bank of America's ability to fulfill its
CRA obligations after consummation of the proposal. Some commenters alleged
that Countrywide's mortgage lending and servicing activities and the increasing rates
of foreclosures in its portfolio were harming borrowers and communities. Many
commenters opposed the proposal or recommended approval only if specific conditions
were imposed. 35 Many commenters also alleged that Bank of America had not

34

12 U.S.C. § 2903.

35 A number of commenters urged the Board to require Bank of America to provide
specific pledges or plans or to take certain future actions, including meeting with
particular organizations. They also asked the Board to condition its approval on a
commitment by Bank of America to institute specific business practices and to take
specific actions with regard to assisting Countrywide mortgage borrowers who were
in default or at risk of defaulting. Some commenters criticized Bank of America's
performance under its previous community reinvestment pledges and urged the Board
to require Bank of America to improve the CRA records of its subsidiary institutions.
The Board consistently has found that (1) neither the CRA nor the federal supervisory
agencies' CRA regulations require depository institutions to make pledges or enter
into commitments or agreements concerning future performance under the CRA with

- 19 ­
adequately addressed the community reinvestment needs of California communities
or expressed general concern about the CRA performance of Bank of America in the
state. One commenter asserted that BA Bank had provided an insufficient amount of
community development loans and investments in New York City.
A. CRA Performance Evaluations
As provided in the CRA, the Board has evaluated the proposal in light
of the evaluations by the appropriate federal supervisors of the CRA performance
records of the relevant insured depository institutions. An institution's most recent
CRA performance evaluation is a particularly important consideration in the applications
process because it represents a detailed, on-site evaluation of the institution's overall
record of performance under the CRA by its appropriate federal supervisor. 36
Bank of America's lead bank, BA Bank, received an "outstanding" rating
at its most recent CRA performance evaluation by the OCC, as of December 31,2006
("BOA Evaluation,,).37 Two other subsidiary banks of Bank of America subject to the
CRA, LaSalle Bank National Association, and FIA Card Services, N.A., also received
"outstanding" ratings at their most recent CRA performance evaluations. A fourth
subsidiary bank, LaSalle Bank Midwest National Association, received a "satisfactory"
rating at its most recent CRA performance evaluation. 38
any organization or to meet with particular persons or organizations; and (2) the
enforceability of any third-party pledges, initiatives, or agreements are matters outside
the purview of the CRA. See Bank of America Corporation, 90 Federal Reserve Bulletin
217,232-33 (2004) ("BOAlFleet Order"). Instead, the Board focuses on the existing
CRA performance record of an applicant and the programs that an applicant has in place
to serve the credit needs of its assessment areas at the time the Board reviews a proposal.
36 See Interagency Questions and Answers Regarding Community Reinvestment,
66 Federal Register 36,620 and 36,639 (2001).
37 The period for the BOA Evaluation was January 1,2004, through December 31,2006.
38 LaSalle Bank National Association was last evaluated by the OCC as of
December 31, 2002. FIA Card Services, N.A., formerly known as MBNA America
National Bank, National Association, was last evaluated by the OCC as of April 4, 2005.
LaSalle Bank Midwest National Association was last evaluated by the OCC as of
August 1,2006. The Board approved Bank of America's application to acquire both

- 20 ­
Countrywide Bank received a "satisfactory" rating at its most recent
CRA performance evaluation by the OCC, as of October 18, 2004 ("Countrywide
Evaluation"), before it converted from a commercial bank to a savings bank subject to
the supervision of the OTS. 39 The Board also has consulted with the OTS, the current
primary federal supervisor of Countrywide Bank. Bank of America has represented
that it would institute the community development and community investment policies
ofBA Bank at Countrywide Bank to strengthen and help meet the banking needs of the
communities it serves.

eRA Performance ofBA Bank.

BA Bank is Bank of America's largest

insured depository institution, representing approximately 79 percent of the
organization's insured depository institution assets. In the BOA Evaluation, the
bank received "outstanding" ratings under the lending, investment, and service tests.
Examiners commended BA Bank's overall lending performance, which they described
as demonstrating excellent or good lending-test results in almost all of the 38 areas rated.
During the evaluation period, BA Bank originated more than 3 million CRA-reportable
loans totaling more than $429 billion, including home mortgage loans totaling
$380 billion. Examiners reported that the bank's distribution ofHMDA-reportable
mortgage loans among borrowers of different income levels was good. 4o In addition,
LaSalle Bank and LaSalle Bank Midwest in 2007. See Bank of America Corporation,
93 Federal Reserve Bulletin CI09 (2007) ("BOA/LaSalle Order"). BA California, BA
Georgia, BA Oregon, and BA Rhode Island are special-purpose banks that are not subject
to the CRA.
Before March 2007, Countrywide Bank was supervised by the OCC. The period for
the OCC's Countrywide Evaluation was January 1,2002, through December 31,2003.
39

In BA Bank's assessment areas in California, examiners generally found that the
bank's lending levels reflected excellent or good responsiveness to the credit needs of its
assessment areas within the state. Examiners reported good distribution of loans among
communities and borrowers of different income levels throughout BA Bank's California
assessment areas. In the New York-White Plains-Wayne Multistate Metropolitan
Division ("MMD") in New York and New Jersey ("New York MMD"), examiners found
that the bank's lending levels retlected excellent responsiveness to the credit needs of its
assessment areas, and they noted that community development lending levels had a
significantly positive impact within the New York MNID.
40

- 21 ­
examiners reported that BA Bank's distribution of small business and small farm
10ans41 among businesses and farms of different revenue sizes was good. In the
BOA Evaluation, examiners noted that the bank offered special loan products with
flexible underwriting standards that assisted the bank in meeting the credit needs of
LMI communities in its areas of operation. Examiners also reported that BA Bank's
level of community development lending significantly enhanced its lending test
performance. 42
After the BOA Evaluation, the bank has maintained a substantial level of
home mortgage, small business, and community development lending. In 2007, the bank
originated HMDA-reportable loans totaling approximately $27 billion to LMI individuals
throughout its assessment areas. BA Bank has continued to offer loan products with a
variety of flexible down-payment and closing-cost options as well as standard FHA and
VA loan products. BA Bank was also recognized in 2007 by the SBA for the tenth
consecutive year as the nation's leading small business lender, with small business loan
originations totaling more than $25.6 billion. BA Bank represented that its community
development lending during 2007 totaled approximately $2 billion.

In this context, "small business loans" are loans with original amounts of $1 million
or less that are secured by nonfarm, nonresidential properties or are commercial and
industrial loans to borrowers in the United States. "Small farm loans" are loans with
original amounts of $500,000 or less that are either secured by farmland or are used
to finance agricultural production and other loans to farmers.
41

Examiners commended BA Bank's community development lending performance
under the investment test in California and New York. Examiners reported that the
bank originated 222 community development loans during the evaluation period,
totaling more than $851 million, in the areas rated that included Los Angeles and
San Francisco. Examiners noted that many of those loans were for economic
development or affordable housing and helped create more than 1,500 jobs and
700 units ofLMI housing. Examiners reported that the bank originated 167 community
development loans, totaling more than $562 million, in the New York MMD during
the evaluation period and noted that a large number of such loans were for affordable
housing and helped create more than 3,200 housing units in LMI areas.
42

- 22­
In the BOA Evaluation, examiners reported that BA Bank consistently
demonstrated strong performance under the investment test, noting that its performance
was excellent or good in 99 percent of its assessment areas. During the evaluation
period, BA Bank made more than 10,500 investments, including grants and contributions,
that totaled almost $4.8 billion. 43 BA Bank funded the development of approximately
100,000 housing units for LMI families through its qualified investments in its
assessment areas. 44 Examiners commended BA Bank for demonstrating significant
leadership in its qualified investment activities and commented that the bank ranked
among the most significant investors in both Low Income Housing Tax Credit
("LIHTC") and New Market Tax Credit ("NMTC") projects and was the largest
financial institution investor in Community Development Financial Institutions ("CDFI")
projects. 45 In addition, examiners noted that BA Bank was one of a handful of financial
institutions that acted as a direct developer of large scale multifamily housing projects in
LMI areas. 46 Examiners also reported that the bank was the second largest corporate

Examiners reported that BA Bank made almost 500 qualified investments totaling
more than $506 million during the evaluation period in the areas rated that included
Los Angeles and San Francisco and helped create approximately 2,900 housing units
in LMI areas. Examiners also found that retail banking services were readily accessible
to areas and individuals of different income levels throughout California. In the
New York MMD, examiners considered the bank's performance under the investment
test to be outstanding. The bank made more than 300 investments totaling approximately
$280 million in the New York MMD during the evaluation period, helping to create
approximately 2,500 housing units in LMI areas.
43

BA Bank's CRA-qualified community development lending during 2007 in its
California and New York assessment areas totaled approximately $385.4 million
and $160.5 million, respectively.

44

Examiners also highlighted BA Bank's significant investments in LIHTC, NMTC,
and CDFI projects in the New York MMD.

45

Examiners also commended BA Bank for creating its Neighborhood Excellence
Initiative, a program in 44 of the bank's markets that is designed to develop relationships
with nonprofit organizations that focus on community development. Examiners noted
that the bank invested almost $50 million in the initiative during the evaluation period.
46

- 23 ­
donor in the United States in 2005 with cash donations of$130 million, more than
half of which qualified for CRA credit. 47
BA Bank also has maintained a substantial level of community
development investments in its assessment areas since the BOA Evaluation. Bank of
America represented that BA Bank made more than 6,000 community development
investments, totaling more than $2.2 billion, during 2007. 48 In addition, Bank of
America represented that the bank's community development subsidiary has developed
more than 5,700 housing units through investments totaling $520 million nationwide
from 2005 through 2007.
In the BOA Evaluation, examiners commended BA Bank's performance
under the service test throughout its assessment areas. 49 Examiners noted that the bank's
provision of retail services showed excellent responsiveness to the banking needs of the
communities and individuals of different income levels in the bank's assessment areas. 50
They reported that BA Bank's retail delivery systems were excellent, with the percentage

47 Some commenters criticized the amount of Bank of America's charitable donations
and its methodology for making these donations. Bank of America represented that it has
a record of providing significant corporate philanthropic donations in all the communities
that it serves. The Board notes that neither the CRA nor the federal supervisory agencies'
implementing rules require that institutions engage in charitable giving.

Bank of America represented that BA Bank's community development investments
during 2007 in its California and New York assessment areas totaled approximately
$476.6 million and $126.8 million, respectively.
48

49 One commenter asserted that Bank of America should ensure that certain banking
products and services are made available to LMI customers in California. Although the
Board has recognized that banks can help to serve the banking needs of communities
by making certain products or services available on certain terms or at certain rates, the
CRA neither requires an institution to provide any specific types of products or services
nor prescribes their costs to the consumer.

BA Bank has entered into partnerships with national and local housing counseling
agencies to offer pre- and post-purchase home mortgage counseling to LMI borrowers.
Such counseling includes reviewing the buyer's credit report, income, and debt;
preparing a budget; and conducting an affordability analysis.
50

- 24­
of the bank's branches in LMI census tracts within its assessment areas approximating or
exceeding the overall percentage of the population residing in such LMI census tracts. 51

CRA Performance o/Countrywide Bank. As noted above, Countrywide
Bank received an overall "satisfactory" rating in its 2004 CRA evaluation, with "low
satisfactory" ratings on both the lending and service tests and an "outstanding" rating
on the investment test. Examiners noted in the Countrywide Evaluation that the bank's
distribution of home mortgage loans reflected adequate penetration of LMI areas in its
two assessment areas when compared with the distribution of owner-occupied housing
units in those areas. In addition, examiners found that Countrywide Bank's lending
performance to borrowers of different income levels in both assessment areas was
adequate considering the affordability barriers for low-income families in those areas.
Examiners noted that the bank's qualified investments and grants to community
development organizations in its assessment areas were excellent relative to its financial
resources. They commended the institution's responsiveness to the areas most pressing
community development needs. In addition, examiners found that Countrywide Bank's
branches, products, and services were reasonably accessible to communities and
individuals of differing income levels and were delivered primarily through alternative
delivery systems, such as the Internet call centers and a network of financial lending
centers. 52
B. Conclusion on CRA Performance
The Board has considered carefully all the facts of record, including reports
of examination of the CRA performance records of the institutions involved, information
provided by Bank of America, comments received on the proposal and responses to those
One commenter alleged that BA Bank's branch network did not adequately serve
LMI communities in New York City. Examiners found that BA Bank's retail services
were reasonably accessible to areas and individuals of different income levels in the
New York MMD. Examiners noted that the bank's recent branch openings and
relocations improved accessibility to the bank's retail services, particularly in
LMI areas.
51

As noted, Countrywide Bank only operates a retail branch in Alexandria and
Fort Worth and both branches only permit customers to conduct limited transactions.
52

- 25 ­

comments, and confidential supervisory information. The Board has also considered
that Bank of America proposes to institute its CRA policies and procedures at
Countrywide. Based on a review of the entire record, and for the reasons discussed
above, the Board concludes that the CRA performance records of the relevant insured
depository institutions are consistent with approval of the proposal. 53
Other Considerations
In light of the public comments received on the proposal, the Board has
considered carefully the compliance records of Bank of America and Countrywide with
fair lending and other consumer protection laws in its evaluation of the public interest
factors. Some commenters alleged, based on HMDA data, that Bank of America and
Countrywide denied the home mortgage loan applications of African American and
Hispanic borrowers more frequently than those of nonminority applicants nationwide
and in certain Metropolitan Statistical Areas ("MSAs,,).54 Several commenters alleged,
based on reviews of HMDA data, that Bank of America and Countrywide made

53 One commenter has reiterated his comments from previous Bank of America
applications that urged the Board not to approve the proposal until Bank of
America met certain "commitments" regarding its lending programs in Hawaii
and its goal for mortgage lending to Native Hawaiians on Hawaiian Home Lands.
See, ~, BOA/Fleet Order at 232-33. In October 2007, the State of Hawaii
Department of Hawaiian Homelands informed Bank of America that it had met
its commitment to the state. As noted in the BOA/Fleet Order, Bank of America's
publicly announced plans to engage in certain lending programs in Hawaii were not
commitments to the Board, and those plans were not conditions of the Board's
approvals in earlier applications by Bank of America or its predecessors. See id.
As also previously noted, the Board views the enforceability of such third-party
pledges, initiatives, and agreements to be matters outside the purview of the CRA.
54 Some commenters also questioned Bank of America's efforts in awarding contracts
to minority- and women-owned businesses. Bank of America represented that 16 percent
of its expenditures in 2007 were to firms that are majority owned by women, minorities,
or disabled individuals. Although the Board fully supports programs designed to
promote equal opportunity and economic opportunities for all members of society,
the comments about supplier diversity programs are beyond the factors the Board is
authorized to consider under the BHC Act. See,~, Deutsche Bank AG, 86 Federal
Reserve Bulletin 509, 513 (1999).

- 26­
disproportionately higher-cost loans to African American and Hispanic borrowers. 55
Some of these commenters also alleged that Countrywide often made such loans without
regard to the borrower's qualifications for lower-cost, conventional mortgage loans. In
addition, many commenters alleged that Countrywide had engaged in various abusive
practices in mortgage sales, including concealing key loan provisions and terms, refusing
to assist at-risk or defaulting customers, prematurely referring mortgages to foreclosure
attorneys, and aiding and abetting abusive or discriminatory sales practices conducted by
various third parties, such as mortgage brokers or home builders.
The Board's analysis of the lending-related concerns included a review of
2006 and preliminary 2007 HMDA data reported by BA Bank and Countrywide Bank
and their lending affiliates. 56 Although the HMDA data might reflect certain disparities
in the rates of loan applications, originations, and denials among members of different
racial or ethnic groups in certain local areas, they provide an insufficient basis by
themselves on which to conclude whether or not Bank of America or Countrywide Bank
has excluded or imposed higher costs on any group on a prohibited basis. The Board
recognizes that HMDA data alone, even with the recent addition of pricing information,
provide only limited information about the covered loans. 57 HMDA data, therefore, have

Beginning January 1,2004, the HMDA data required to be reported by lenders were
expanded to include pricing information for loans on which the annual percentage rate
(APR) exceeds the yield for U.S. Treasury securities of comparable maturity by 3 or
more percentage points for first-lien mortgages and by 5 or more percentage points for
second-lien mortgages. 12 CFR Part 203.4.
55

The Board reviewed HMDA data for Bank of America in BA Bank's combined
assessment areas nationwide and in California and North Carolina, in its assessment
areas in the Charlotte, North Carolina MSA, and in the MSAs cited by commenters.
The Board reviewed HMDA data for Countrywide Bank in its combined assessment
areas (consisting of the Washington, D.C. MMD, the Bethesda, Maryland Metropolitan
Division, and the Dallas-Fort Worth, Texas MSA), in California and Delaware, and in
the MSAs cited by commenters. The Board notes that 2007 HMDA data are preliminary
and that final data will not be available for analysis until fall 2008.
56

The data, for example, do not account for the possibility that an institution's outreach
efforts may attract a larger proportion of marginally qualified applicants than other
institutions attract and do not provide a basis for an independent assessment of whether
57

- 27 ­
limitations that make them an inadequate basis, absent other information, for concluding
that an institution has engaged in illegal lending discrimination.
The Board is nevertheless concerned when HMDA data for an institution
indicate disparities in lending and believes that all lending institutions are obligated to
ensure that their lending practices are based on criteria that ensure not only safe and
sound lending but also equal access to credit by creditworthy applicants regardless of
their race or ethnicity. Moreover, the Board believes that all bank holding companies
and their affiliates must conduct their mortgage lending operations without any abusive
lending practices and in compliance with all consumer protection laws.
In carefully reviewing the concerns about the organizations' lending
activities, the Board has taken into account other information, including examination
reports that provide on-site evaluations of compliance with fair lending and other
consumer protection laws and regulations by BA Bank, Countrywide, and their lending
affiliates. The Board also has consulted with the OCC, the primary federal supervisor of
Bank of America's subsidiary banks, and with the OTS, the primary federal supervisor of
Countrywide and Countrywide Bank. In addition, the Board has considered information
provided by Bank of America, including its plans for managing the combined mortgage
operations of BA Bank and Countrywide after consummation of the proposal.
The Board notes that Bank of America has represented it will operate
the combined mortgage operations ofBA Bank and Countrywide under BA Bank's
policies, procedures, internal controls, and other risk-management systems to ensure
compliance with fair lending and other consumer protection laws and regulations. The
record, including confidential supervisory information, indicates that Bank of America
has implemented many processes to help ensure compliance with all consumer

an applicant who was denied credit was, in fact, creditworthy. In addition, credit history
problems, excessive debt levels relative to income, and high loan amounts relative to the
value of the real estate collateral (reasons most frequently cited for a credit denial or
higher credit cost) are not available from HMDA data.

- 28 ­
protection laws and regulations. 58 Bank of America's compliance program includes
fair lending policy and product guides, compliance file reviews, testing of HMDA
data's integrity, and other quality-assurance measures to help ensure compliance with
consumer protection laws. Bank of America also stated that it provides annual training
to ensure that Bank of America's associates understand their responsibility for
complying with the organization's fair lending and consumer protection policies.
Bank of America represented that it would review and make appropriate
modifications to the fair lending and consumer protection policies and procedures that
would apply to the operations of Countrywide after consummation of the proposal and
that it would institute unified policies and procedures for originating affordable
mortgages, reducing foreclosure rates, serving traditionally underserved communities,
and enhancing customer protections. Those measures would include discontinuing
the origination of subprime loans and nontraditional mortgage products that may result
in negative amortization; offering customers loan products for which they qualify;
providing adequate disclosure of available product options, features, rates, and terms;
and strengthening internal training and compliance programs. 59
In addition, Bank of America represented that it would dedicate substantial
financial, staffing, and other resources at the combined mortgage operations to assist

Some commenters alleged that the terms and fees associated with the credit card and
some checking accounts offered by Bank of America are unfair or deceptive. As noted
previously in the BOA/LaSalle Order, Bank of America has stated that it does not engage
in or condone deceptive practices and that it conducts multiple, ongoing reviews to
ensure that the terms, conditions, and marketing of its credit card products are appropriate
and comply with applicable laws and regulations, including the Truth in Lending Act and
the Board's Regulation Z. See BOA/LaSalle Order at CIIS.
58

Many commenters expressed concern regarding the types of mortgage products to be
sold by the combined mortgage operations of Bank of America and Countrywide after
consummation of the proposal. Bank of America represented that it would offer a range
of products that would continue to respond to market conditions and consumer demands,
including conforming loans that are underwritten according to guidelines of government­
sponsored entities or other standard guidelines; interest-only, fixed-rate, and adjustable­
rate mortgage ("ARM") products, subject to a lO-year minimum interest-only period; and
fixed-period ARMs subject to protections against severe step-ups in payment amounts.
59

- 29­
customers in default or at risk of default with loan workouts to mitigate foreclosures.
Bank of America plans to enhance loss-mitigation training, responsiveness to customers,
management oversight, and audits of loan workouts and loss-mitigation activities. Bank
of America also stated that it would enhance the combined mortgage operation's
risk-management systems for originating and servicing loans received through brokers
and correspondents to ensure compliance with fair lending and other consumer protection
laws and regulations, as well as with prudent safety and soundness standards. These
measures would include establishing qualification criteria for those third-party originators
and monitoring their performance; requiring an executed agreement with those third
parties to abide by applicable laws, regulations, and Bank of America's comprehensive
guidelines; subjecting all loans received from third parties to automated fraud prevention
and underwriting systems for approval; and limiting total broker compensation. 60
Based on all the facts of record, the Board has concluded that
considerations relating to the fair lending and consumer protection law compliance
are consistent with approval under section 4 of the BHC Act.
Public Benefits
As part of its evaluation of the public interest factors under section 4 of the
BHC Act, the Board has reviewed carefully the public benefits and possible adverse
effects of the proposal. The record indicates that consummation of the proposal would
result in benefits to consumers currently served by Countrywide. The proposal would
Some commenters expressed concerns about Bank of America's relationships with
unaffiliated third parties engaged in subprime lending. The commenters provided no
evidence that Bank of America originated, purchased, or securitized "predatory" loans
or otherwise engaged in abusive lending practices. Bank of America has policies and
procedures to help ensure that the subprime loans it purchases and securitizes are in
compliance with applicable state and federal consumer protection laws. As noted in the
BOA/LaSalle Order, Bank of America has stated that it conducts extensive due diligence
reviews of the third-party loan originators with which it does business, as well as the
loans that it purchases and the servicers of each pool, to help ensure that Bank of
America is not facilitating "predatory" lending. See BOA/LaSalle Order at C 112. The
Board expects all banking organizations to conduct their operations in a safe and sound
manner with adequate systems to manage operational, compliance, and reputational risks
and will take appropriate supervisory actions to address and prevent abusive lending
practices.
60

- 30­
also allow Bank of America to offer a wider array of affordable mortgage loans,
enhanced loan remediation processes, and other banking products and services to
Countrywide customers. Bank of America has represented that it would grant
Countrywide Bank customers access to BA Bank's ATM network and branch locations
on the same terms and conditions as BA Bank customers. As noted, Bank of America
also would implement enhanced risk-management systems at the combined organization.
The Board has determined that the conduct of the proposed nonbanking
activities within the framework of Regulation Y and Board precedent is not likely to
result in significant adverse effects, such as undue concentration of resources, decreased
or unfair competition, conflicts of interests, or unsound banking practices. Moreover,
based on all the facts of record, the Board has concluded that consummation of the
proposal can reasonably be expected to produce public benefits that would outweigh
any likely adverse effects. Accordingly, the Board has determined that the balance of
the public benefits under the standard of section 4G)(2) of the BHC Act is consistent
with approval.
Conclusion
Based on the foregoing and all the facts of record, the Board has
determined that the proposal should be, and hereby is, approved. In reaching its
conclusion, the Board has considered all the facts of record in light of the factors that
it is required to consider under the BHC Act. The Board's approval is specifically
conditioned on compliance by Bank of America with the conditions imposed in this
order and the commitments made to the Board in connection with the notice. The
Board's approval also is subject to all the conditions set forth in Regulation Y, including
those in sections 225.7 and 225 .25(c), 61 and to the Board's authority to require such
modification or termination of the activities of the bank holding company or any of its
subsidiaries as the Board finds necessary to ensure compliance with, and to prevent
evasion of, the provisions of the BHC Act and the Board's regulations and orders issued
thereunder. For purposes of this action, these conditions and commitments are deemed to
61

12 CFR 225.7 and 225.25(c).

- 31 ­
be conditions imposed in writing by the Board in connection with its findings and
decisions herein and, as such, may be enforced in proceedings under applicable law.
The acquisition shall not be consummated later than three months after
the effective date of this order, unless such period is extended for good cause by the
Board or by the Federal Reserve Bank of Richmond, acting pursuant to delegated
authority.
By order of the Board of Governors,62 effective June 5, 2008.

Robert deV. Frierson

Deputy Secretary of the Board


62 Voting for this action: Chairman Bernanke, Vice Chairman Kohn, and
Governors Warsh, Kroszner, and Mishkin.

- 32 ­
Appendix
Other Nonbanking Subsidiaries of Countrywide
to be Acquired under Section 4 of the BHC Act
(1)	

CB Securities Holdings I, Inc. and CB Securities Holdings 2, Inc., both
of Thousand Oaks, California; Countrywide Asset Management Corp.,
Countrywide Commercial Administration LLC, Countrywide Commercial
Real Estate Finance, Inc., Countrywide Home Loans, Inc., Countrywide
Mortgage Ventures, LLC, Countrywide Servicing Exchange, and LandSafe
Appraisal Services, Inc., all of Calabasas, California; Countrywide Home
Loans Servicing LP, Plano, Texas; Countrywide Warehouse Lending,
West Hills, California; CTC Real Estate Services, Simi Valley, California;
CWB Venture Management Corporation, Countrywide KB Home Loans,
LLC, and CWB Mortgage Ventures, LLC, all of Thousand Oaks, California;
LandSafe Credit, Inc., LandSafe Flood Determination, Inc., and LandSafe
Title of Texas, Inc., all of Richardson, Texas; LandSafe Services of Alabama,
Inc., Montgomery, Alabama; LandSafe Title of California, Inc., Rosemead,
California; LandSafe Title of Florida, Inc., Fort Lauderdale, Florida; and
LandSafe Title of Maryland, Inc., Baltimore, Maryland, and thereby engage
in extending credit and activities usual in connection with making, acquiring,
brokering, or servicing loans or other extensions of credit, in accordance with
sections 225.28(b)(1) and (2) of Regulation Y (12 CFR 225.28(b)(1) and (2));

(2)	

ReconTrust Company, National Association and ReconTrust Company,
both of Thousand Oaks, California, and thereby engage in trust company
activities in accordance with section 225.28(b)(5) of Regulation Y
(12 CFR 225.28(b)(5));

(3)	

Countrywide Tax Services Corp., Plano, Texas, and thereby engage in
providing tax services for residential mortgage transactions in accordance
with section 225.28(b)(6) of Regulation Y (12 CFR 225.28(b)(6));

(4)	

Countrywide Capital Markets Asia (H.K.) Limited, Hong Kong, Special
Administrative Region, People's Republic of China; Countrywide Capital
Markets Asia Singapore Pte. Ltd., Republic of Singapore; Countrywide
Investment Services, Inc., Chandler, Arizona; and thereby engage in providing
securities brokerage services in accordance with section 225 .28(b)(7) of
Regulation Y (12 CFR 225.28(b)(7)); and

(5)	

The Countrywide Foundation, Calabasas, California; and CWB Community
Assets, Inc., Thousand Oaks, California, and thereby engage in community
development activities in accordance with section 225.28(b)(12) of
Regulation Y (12 CFR 225.28(b)(12)).