In the months before Bank of America Corp. acquired Countrywide Financial Corp., government officials exchanged emails discussing the beleaguered mortgage lender and rumors that it might collapse.

The almost 40 pages of emails from Treasury Department officials, which the Charlotte Observer obtained through a public-records request, span from when B of A first invested in Countrywide in August 2007 to when the bank acquired the mortgage lender in January 2008.

The messages warn of rumors that Countrywide might fail as its shares tumbled. A message on Aug. 16, 2007, from Treasury Department official Robert Steel, who later became chief executive of Wachovia Corp., said that Countrywide's "days as indep. Inc. are numbered," the Charlotte Observer reported. That same day, Countrywide borrowed $11.5 billion from a group of banks.

When reports swirled that regulators had encouraged the B of A acquisition of Countrywide, Jennifer Zuccarelli, who at the time was a public affairs director for the Treasury Department and is now a spokeswoman for JPMorgan Chase & Co., wrote on Jan. 10, 2008, that "I am going to kill the idea that we were out there encouraging it. Of course we were aware, but that doesn't mean we're picking up the phone asking for bids," the Charlotte Observer reported.

The emails also showed that the Treasury Department officials were warned that the subprime crisis that surfaced in 2007 would lead to a recession. One official received an email in November 2007 from an investment researcher that said, "The entire mortgage market is now contracting and fighting for its very existence. Credit will get even tighter still and the credit crunch, which of course is already spreading beyond housing, will get that much worse," the Charlotte Observer reported.

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