We've previously speculated whether Bank of America (NYSE: BAC) has come to regret its $4 billion Countrywide purchase in 2008. CEO Brian Moynihan took the reins after the deal was inked, so he was never as emotionally invested in the acquisition as his predecessor Ken Lewis, who staked his legacy on it and Merrill Lynch. Moynihan, whether he thinks Lewis stumbled badly with the purchase or not, has been left to grapple with it. And that has proven difficult.

So far, the bank has been forced to take write-downs of a whopping $5.5 billion because of Countrywide. "Bank of America has set aside billions of dollars more to clean up Countrywide's mortgage mess, including an avalanche of new disputes about faulty paperwork and foreclosures--and some analysts say it won't be enough," reports the Washington Post in a long look at all that ails the bank.

"It has thrown 20,000 employees--the equivalent of two Army divisions--at the job of dealing with the delinquent mortgages. Most of those are the legacy of Countrywide, which originated 10 million of the 14 million loans Bank of America is managing," notes the Post. "That legacy is a burden not only for Bank of America but for the entire country. Countrywide's bad mortgages are clogging the U.S. housing market, dragging down home values and slowing the recovery."

Perhaps the most severe damage has been reputational. By the time Countrywide had developed into the preeminent crazy mortgage company, even founder Angelo Mozillo seemed to have some doubts about negative amortization and other practices. All of the ill will such products have generated now affects the Bank of America brand.

It remains to be seen how long and how much it will take Moynihan to right the ship. He may eventually get to the point where he can claim a positive return on the investment. However, it's going to take longer than Lewis ever imagined.

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