The dogs begin to bark, the hounds begin to howl

Countrywide dogs howling over bare bones

Just when BofA maybe thought all was well with their purchase of Countrywide, suddenly a pack of dogs wants to (and may well) force Countrywide into bankruptcy to grab assets. Why? Because Countrywide didn’t tell holders of certain of their convertible notes that, due to them being bought, the notes could be cashed in. BNY Mellon as a custodian holder of these notes has sued.

And what is unique in this case is the pack of dogs (Countrywide bondholders), now have a vested interest in pushing Countrywide into bankruptcy so they can get some of the meat (Countrywide’s servicing unit), instead of worthless bones (Countrywide’s Debt).

This must be that “invisible hand of the marketplace” capitalists are so proud of.


  1. I think about all of the people that screwed in the Enron scandal because of big corporate creditors getting paid before stockholders did. (or something like that?) I can just imagine that the consumer would be last in line in the pecking order.

  2. Sue, who is a CPA just looked it up

    If bankruptcy, here’s the order of who gets paid first

    1) secured creditors
    2) non-dischargeable (taxes, student loans, etc.)
    3) unsecured creditors

    Bonds and preferred stock can be 1) or 3) depending if they were secured or not.

    Lawsuits are probably either 2.5) or 3). She says the order of who gets paid is complicated, and can depend on the jurisdiction.

    She says call the CT Attorney General (maybe they have a hotline about the lawsuit) and ask.

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