It is common knowledge that the fallout from the sub-prime lending fiasco has spread to other sectors of the economy and now has America staring over the precipice of a recession. As liquidity tightens up and housing prices drop dramatically, America looks set to experience its first consumer-led recession in a generation. However, a possible acquisition at the very epicenter of the mortgage crisis is leading expert financial bloggers to speculate that the damage could be minimized.

Bank of America has finalized a deal to purchase a significant portion of the company at the center of the sub-prime mortgage fallout- Countrywide Financial. While rumors are also circulating that Warren Buffett is readying a play for a large chunk of the troubled mortgage lender. A number of top financial bloggers believe that this sign of faith from two stock market heavyweights is exactly what the market needs to help stave off further losses and reverse the current cycle.

Howard Linzon’s blog, widely-read for investment analysis, was adamant that Bank of America’s 2 billion dollar investment in Countrywide could bring back much needed confidence while simultaneously spelling trouble for short sellers. “Man, were the leaners and momentum shorts wrong. Somebody hates them… No sooner does my post speculating about a housing bottom dry than Bank of America plunge protects Countrywide with $2 billion.” While Linzon’s portfolio is maintaining its distance from financial and homebuilding stocks he implies that BoA’s clout is enough to make investors sit up and take notice. He stated “I don’t know if Bank of America can fix things, but they are going to put a new world of hurt on the shortsellers once again.”

The New York Times Dealbook blog preferred to focus more on Warren Buffet’s potential bid for a portion of Countrywide stock. They reported that speculation alone was enough to drive the companies price skyward. “Shares of Countrywide Financial rose as much as 11.5 percent on Tuesday on speculation Mr. Buffett’s Berkshire Hathaway might buy part of the largest U.S. mortgage lender.”
The post mentions that Countrywide shares have lost almost half of their total value this year due to the rising impact of delinquencies and foreclosures. Seemingly the news comes at a crucial time for Countrywide with Dealbook also reporting that “the news came a day after a Merrill Lynch analyst said that that the company may be facing bankruptcy if liquidity worsens.” The post also offers a quote from Buffet himself stating that “the worsening credit and housing markets may present some “real” investment opportunities.”
Interestingly enough, the New York Times has drawn some heat from some financial bloggers for allegedly underreporting Bank of America’s partial acquisition. Writing in the Forbes Digital Rules Blog, Rich Karlgaard made it plain to see that he considered this event to be very big news “The story of the last 24 hours has been Bank of America's plan to invest $2 billion in Countrywide Financial. Here, at last, was the event the financial world sorely needed. A big buyer, a smart buyer, had stepped in and set a price for damaged sub-prime paper.” 
However, Karlgaard was clearly incensed that the Times didn’t print many details about BoA. Karlgaard followed up the previous quote by saying, “But the New York Times barely gives it a mention. Not a word on the front page. Barely a word on the business page!” Karlgaard noted that the story was featured above the fold on today’s issue of the Wall-Street Journal and the Financial Times and he accused the NYT of economic fear-mongering. “So when they bury the week's most important financial event, it isn't because they failed to recognize its importance--I'm sure they did. They just didn't like its implication of good news.”

As the sub-prime crisis continues to unfold, it has rapidly become one of the most talked-about issues in the financial blogosphere. While nobody seems to be completely sure how this scenario will end up, the world of expert financial blogs seems to be in relative agreement that Bank of America and Warren Buffet could be about to do America’s economy a tremendous service, regardless of how much capital is generated by the acquisition, simply by injecting several billion dollars worth of confidence back into the US markets.

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