by Calculated Risk on 11/20/2007 01:13:00 PM

Remember back in August when BofA invested $2 Billion in Countrywide preferred stock at $18 per share conversion price? (hat tip Atrios)

Bank of America knows when it's time to buy.

The Charlotte, N.C.-based bank is making a $2 billion equity investment in the beleaguered Countrywide Financial, the companies said Wednesday evening.

Bank of America will purchase $2 billion worth of preferred Countrywide stock yielding 7.3%, and that can be converted into common stock at $18 per share, giving the mortgage lender a much-needed cash infusion amid a crippling credit crunch.

Countrywide is in single digits today. BofA probably hedged their position (I checked the SEC filing and there was no prohibition against hedging) otherwise they've lost almost half their investment. (UPDATE: "half" is probably incorrect. This is convertible preferred stock with a long term. A mark to market loss would probably be far less than half because of the time value of the preferred - like a call option).

UDPATE2: From Reuters: Countrywide shares fall on liquidity rumors

Shares of Countrywide Financial Corp fell ... on speculation the company was having liquidity problems, traders and strategists said.