Bank of America is in an advanced stage of negotiations with California-based Countrywide Financial regarding a buy out. The deal can save America’s largest mortgage lender the embarrassment of going through Chapter 11 bankruptcy. The federal law restricts any bank from acquiring anything that can elevate its share of US deposits above 10 percent. If this deal is through, then the bank has the capacity of enhancing its reach staying within the limits of the law. There is no surety that the deal will be through but the verdict will be out soon. The market value of Countrywide had gone down to around $3bn before the news of talk being held came out. The moment the news was out, the shares shot up by almost fifty percent.

Countrywide has been struggling to rise above its bad patch. It has been criticized by the financial sector regarding certain lending practices of the company. They were also accused of creating the sub-prime mortgage crisis. Bank of America will definitely take into account all the liabilities of Countrywide before striking a deal. The bank has a history of buying out distressed assets, since it bought La Salle from ABN Amro last year.