While such growth would be higher than industry-wide levels during the recent strong economy, it will still represent a decline from the levels American Express has been generating in recent years.

The 2008 business plan also assumes write-off levels in the managed U.S. lending portfolio will average 5.1% to 5.3% for the full year.

MasterCard (MA: chart), the second largest network of credit card processors, fell 7% or $15 to $181.03.

10:00AM New York – Bank of America agrees to purchase Countrywide Financial for $4 billion.

Countrywide Financial Corporation, at the center of the mortgage market malaise, agreed to be bought out by Bank of America for $7.16 per share or $4 billion.

In August 2007, Bank of America purchased preferred stock in the troubled mortgage lender for $2 billion at $18 with 7.25% yield and is convertible at $18 per share.

Countrywide stock has plummeted in value after taking significant losses and rumors of impending bankruptcy filing that the company has denied.

Deal Terms

Under the terms of the agreement, shareholders of Countrywide would receive .1822 of a share of Bank of America stock in exchange for each share of Countrywide.

The purchase is expected to close in the third quarter and to be neutral to Bank of America earnings per share in 2008 and accretive in 2009, excluding merger and restructuring costs.

Bank of America expects $670 million in after-tax cost savings in the transaction, or 11% of the expense base of the two companies'' mortgage operations. About one third of those savings would come in 2009, two thirds would be realized in 2010 and savings would be fully realized in 2011.

Bank of America in the morning trading fell 93 cents to $38.36 and Countrywide fell $1.27 to $6.49.

Why Now?

Bank of America is looking for a scale in originating and servicing mortgages in the U.S. Countrywide had $408 billion in mortgage originations in 2007 and has a servicing portfolio of about $1.5 trillion with 9 million loans. The purchase also includes Countrywide''s Lender Placed insurance and other businesses.

Bank of America will benefit from Countrywide''s broader mortgage capabilities, including its extensive retail, wholesale and correspondent distribution networks. The Calabasas, California-based company operates more than 1,000 field offices and has a sales force of nearly 15,000. Countrywide also has a leading mortgage technology platform, a well known brand in home lending and management expertise in a number of key areas.

While few analysts dispute the benefits of the scale and Countrywide network of branches it is the timing and price tag of the deal that worries the most. The housing market correction is still ongoing and is likely to get worst in the next eighteen months.

Bank of America will take $1.2 billion restructuring charges.

Bank of America appears to be motivated in parts from its earlier $2 billion investment in the company. Since the purchase of convertible stock in the company in August 2007 Countrywide stock has lost more than 66% in value.

Acquisition Spree

Bank of America has done deals of nearly $100 billion in the last four years including the purchase of $48 billion of Fleet Boston Financial in 2004, purchase of MBNA in 2006 $34.2 billion, U.S. Trust from Charles Schwab for $3.3 billion, and LaSalle Bank in Chicago for $21 billion.