But Countrywide's problems have only worsened, leaving Bank of America with big losses.
What Mr. Mozilo, now 71, knew about Countrywide's problems, and precisely when he knew it, was what eventually led the Securities and Exchange Commission to file civil securities fraud charges against him last year.
The stock market has been buffeted for months by concerns about fallout from the mortgage and credit crisis, and Countrywide's problems with delinquent and defaulting loans have sent stocks falling even in recent days.
"It will be ugly, but it can happen!" Countrywide's problems come from its inability to raise sufficient funding in the debt and cash markets for its mortgage operations.
While working for Countrywide, my job was to fix problems, and being an ethical and moral person, I lacked the ability to distinguish between problems that saved/made the bank money and problems that saved borrowers money.
Mr. Bailey of Countrywide said the problem is persuading the credit union to agree to take less than it is owed.
A sale like that would immediately end Countrywide's funding problems.
The chief executives of three firms that experienced subprime related problems, Countrywide, Merrill Lynch and Citigroup, earned a total of $460 million between 2002 and 2006.
"Bank of America would be a responsible home for fixing the problems that Countrywide has created".
On Wednesday, an analyst at Merrill Lynch, Kenneth Bruce, put a "Sell" rating on Countrywide stock, saying liquidity problems could force the company to seek bankruptcy protection in severe circumstances.
