The Service Employees International Union, growing critic of deals -- especially ones involving private equity firms -- wasted no time in denouncing Bank of America Corp.'s $4 billion purchase of troubled Countrywide Financial Corp., which the union cites as the leading contributor to the current subprime mortgage crisis.
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The press release cites the unknown dangers that Bank of America may have on its own balance sheet as reason enough to forbid the combination. It also includes some poetic language about the troubled banking industry:
Permitting such concentration of risk would be like putting a sick patient, Bank of America, together in the same room with a highly contagious and terminally ill patient, Countrywide, and expecting both of them to get better.
However, the SEIU's final point of contention seems to negate some of its argument:
While a Bank of America bailout of Countrywide could help some mortgage holders today, the long-run harm in terms of reduced competition, higher fees, and even more hidden influence in legislative and regulatory circles is just too high a price to pay for the nation's working families.
After all, the press release notes the possibility that Countrywide could go bankrupt without this deal, so the net result in the long run would seem to be the same since competition would be reduced as Countrywide likely would still disappear. - Matthew Wurtzel
See press release from SEIU
See deal announcement story from TheDeal.com
