Just have to gloat a bit.

I called this one when the original deal was announced. I said that BAC was going to set this up as a toxic dumping ground, refuse to guarantee jack, and reserve the right to set it adrift and bankrupt it on purpose.

Guess what Bloomberg just published?

"''There is no assurance that any such debt would be redeemed, assumed or guaranteed,' the Charlotte, North Carolina- based bank said in an April 30 regulatory filing, adding that no decision has been reached. Investors have grown more optimistic the bank would back Countrywide debt, and Standard & Poor's said this week it may raise Countrywide's rating to match Bank of America's.

....

'I'd be quite concerned if I was a bondholder if the intent of Bank of America is as it reads in the filing,' said Gary Austin, founder of PDR Advisors LLC, an investment management firm in Charlotte."

No really? You'd be concerned?

Told 'ya so.

Now let's see what the bond market thinks of this tomorrow. Why do I think it will go over like a lead balloon?

Hint: All of CFC's preferred and bonds are going to be treated as zeros, or damn close to it, at the open tomorrow. Betcha the stock reacts well to this one too.

Next question:

How do you think the bond market will react if JPM decides that the same sort of posture is appropriate with regards to a certain "Bear" they recently consumed, and do you think the bond market just might front-run any attempted play like that starting, oh, tomorrow?

Here's validation of what I said back when this deal was first announced, but now someone else is saying it.... nearly four months later. Gee, what took you idiot "analysts" so long to figure out what was obvious to me the instant this deal was announced?

"Whalen expects Bank of America will seek to absorb the best assets including Countrywide Bank, while the debt remains with a new company created by the merger, Red Oak Merger Corp. Red Oak may then file for bankruptcy, shielding Bank of America from liability, Whalen said."

Ding ding ding ding ding.

Here is what I said back in January:

"Note that on the conference call with BAC this morning they were very evasive about whether they would be taking CFC's debt onto their own books. Gee, you think?

Uh guys, the answer to a question that someone won't answer is a big fat NO!"

Those of you who didn't unload either the preferred or the CFC bonds when you had the chance, after I warned 'ya - there's a word for you tomorrow.

SUCKERS!

Expect spreads to have a certain parabolic look to them tomorrow on anything related to Countrywide and, if there is a man with a brain in the bond market, all these other "sticksave" deals - like Bear Stearns - will get the same treatment.

Now consider this - CFC drew an awful lot of money out of the FHLB system via their Atlanta branch. What happens to all of that if they go "boom"? Could this take the FHLB system out too?

This has the potential to get very, very interesting in a hurry.