According to the Sacramento Business Journal:

"Bank of America Corp. has moved Countrywide Financial Corp.'s debt to an indirect unit owned by the banking giant, leaving it unclear whether BofA will back Countrywide's huge debts.

According to a filing this week with the Securities and Exchange Commission, Countrywide says Red Oak Merger Corp. assumed all of the Calabasas-based mortgage company's financial obligations in conjunction with the July 1 purchase of Countrywide by BofA for $2.5 billion.

BofA created Red Oak and remains its owner. Red Oak has since been renamed Countrywide Financial Corp."

Oh, jeeze they are going to try it after all, the bond holder lawsuits should be entertaining. Bank of America is trying to pick the good assets from Countrywide while leaving the crap in a holding company that will essentially end up going bankrupt leaving bond (bag) holders out of luck.  As I mentioned in a previous post this is the same strategy that some of the large asbestos manufacturers tried to get out from under billions in lawsuits and were denied by the courts.  I think a judge will find enough evidence that Bank of America knows about the liabilities here (especially after the state lawsuites) to unwind the transaction, or at least I hope a judge has enough sense to do that.

One question is how much of the $51B in debt owed to the Federal Home Loan Bank get transfered into this entity.  That could spell HUGE for the entire system if that gets defaulted on.