When I first read this story, I was confused.  Then I reread the story.  Now I’m even more confused.

It appears that Bank of America wished to buy Countrywide, but before they could do so, they needed approval from the Federal Reserve.  Does anyone understand why?

AP reports:

CHARLOTTE, N.C. - The Federal Reserve on Thursday approved Bank of America Corp.’s purchase of distressed mortgage lender Countrywide Financial Corp.

In a statement, the federal regulatory said it considered many comments for and against the company buyout and “has considered carefully the financial factors of the proposal.”

In its order, the Fed board said that after the proposed deal Bank of America would remain the largest depository institution in the country, controlling approximately $773.4 billion in deposits, which represent 10.9 percent of total insured bank deposits in the country.

The Fed board approved the deal in a 32-page order issued Thursday. Countrywide had said previously that it will hold a special meeting of shareholders on June 25 to approve the proposed sale.

Like I said, I’m really confused… because if I didn’t know better, I’d say that this is the most blatant case of corporatism I’ve ever heard of.  But that’s just me.

UPDATE: Haris posits that perhaps the Fed is guaranteeing Countrywide’s assets, and therefore it’s acting as some sort of bondholder.  But if this is true, how on earth does it make any sense?  I wonder what the respective presidential candidates think about this…