Fed plans BofA-Countrywide hearings
Public meetings scheduled for next month in Los Angeles and Chicago to generate comments about $4 billion deal.
NEW YORK (CNNMoney.com) -- Americans will get a chance to speak their minds on the proposed merger between Bank of America and Countrywide Financial Corp., the Federal Reserve said Thursday.
The central bank will hold a one-day hearing in Chicago on April 22 and two days of hearings in Los Angeles on April 28 and 29 on the $4 billion all-stock deal that would transform Bank of America (BAC, Fortune 500) into the nation's largest mortgage lender.
The Fed said Thursday it hopes that the hearings will provide some insight into whether the benefits of the acquisition - such as greater convenience for consumers - outweigh the potential costs such as decreased competition.
The hearings, however, are a bit of an unorthodox move for the Fed. Even thought the central bank does have the power to do so, it rarely allows for a public hearing on a proposed acquisition. Before Thursday's announcement, the central bank accepted public comment on the deal, but only in writing.
The last time the central bank sponsored such a hearing was back in March 2004 when regulators allowed the public to weigh in on JPMorgan Chase's (JPM, Fortune 500) bid for the credit card issuer Bank One.
At the time, more than 150 people testified at public meetings held in New York and Chicago, and nearly 300 additional written comments were submitted. Less than 3 months later, the Fed approved the deal.
While comments from next month's hearings could factor into the Fed's decision, the consensus lately on Wall Street and among banking experts is that a tie-up between Bank of America and Countrywide will happen.
When the deal was announced, analysts expected it to face little headwind from federal regulators as the Federal Deposit Insurance Corporation, the government agency that guarantees consumer deposits, would likely have to order a bailout of Countrywide if the company's situation worsened.