Abigail Hofman: Hindsight is 20/20

by Abigail Hofman 'For sale' signsAnd talking of the US, might Ken Lewis, the taciturn chief executive of Bank of America, be having problems with his property portfolio? I first wrote about Bank of America in May 2006 when I mused: “The bank is heavily exposed to the faltering American housing market and the indebted US consumer who during the past decade has been busy converting his home into an ATM.” However, in August 2007, Ken decided to double up and invested $2 billion in Countrywide Financial, the largest US mortgage lender. In the press release, Lewis said: “We believe that in the current turmoil, the stock market has been underestimating the value in Countrywide’s operations and assets.” By January 2008, Countrywide shares were trading 5O% lower than in August 2007, so Ken decided to purchase the whole company. Countrywide shares are now worth less than a quarter of what...