The Washington Examiner has obtained a “confidential and proprietary” document produced by Bank of America and titled “FHA Housing Stabilization and Homeownership Retention Act of 2008.” The “Discussion Document” dated March 11, 2008, closely resembles the housing bailout bill drafted by Sen. Chris Dodd (D-Conn.) that the Senate is set to vote on within days. Senate staffers have told the Examiner‘s Tim Carney, “the bailout section is exactly what Bank of America and Countrywide wanted. Its obvious they got what they asked for.”

Countrywide Financial is at the heart of the mortgage foreclosure crisis. It has $95 billion in loans on its books, many of the adjustable-rate-mortgage loans that have been defaulting at unprecedented rates. Countrywide has lost $2.5 billion in the last three quarters and had $6 billion in nonperforming assets on its book in the first quarter of 2008. Despite these red flags, Bank of America is proceeding to buy Countrywide for $4 billion. Analysts and stockholders have been highly critical of the deal since the beginning, wondering why Bank of America would be willing to take on such financial risk.

The bill about to be voted on by the Senate would allow banks like Bank of America to pick their riskiest loans and dump them on the Federal Housing Administration. In exchange for taking just a 10% cut on the value of the loan, the banks would receive cold hard cash from U.S. taxpayers. Their risk would be eliminated, entirely shifted to the FHA and the U.S. government. Passage of the bill would make Bank of America’s acquisition of Countrywide much more profitable.

The Bank of America-Countrywide merger would also help solve a huge political embarrassment for liberals in Congress. Rep. Barney Frank (D-Mass.) explained when asked about the discount loans Dodd received from Countrywide’s CEO: “The best thing for all of us is for Countrywide to just disappear. If Countrywide were a continuing entity we’d have to look at it, but they’re going out of business.”