LOS ANGELES (AP) -- The $422 million loss Countrywide Financial Corp. reported Tuesday didn't appear to scare off Bank of America.

"At this point, everything is a go to complete this transaction," Bank of America Corp. Chief Executive Ken Lewis said at an investor conference in New York.

Countrywide's fourth-quarter earnings fell far short of Wall Street estimates, with a loss more than double what analysts predicted. But investors didn't run away from the nation's mortgage lender; instead, they sent Countrywide shares up 36 cents, or 6.5 percent, to close at $6.31.

Stock in Bank of America -- which has offered $4.1 billion in stock for Countrywide -- rose 74 cents, or 1.8 percent, to close at $41.94 Tuesday.

Calabasas, Calif.-based Countrywide posted its second consecutive quarterly loss as rising home loan delinquencies forced it to boost loss provisions and take impairment charges.

In the third quarter, it reported a loss of $1.2 billion.

The $422 million loss -- or 79 cents per share -- contrasts with earnings of $622 million -- $1.01 per share -- during the same period the previous year. Analysts polled by Thomson Financial, on average, has

In the summer of 1992, as a young student in economic history, I studied comparative economics at Georgetown University in Washington, D.C., and interned at a free-trade lobby. During my course of study, I had the opportunity to visit the Federal Reserve with a group of students to meet with a board governor and be briefed on the workings of the central bank of the United States. Of course, being young, I was more excited by the fact that I sat in Alan Greenspan's chair (nameplate affixed) at the Fed's conference room table than I was with what I was supposed to be learning. In any case, unlike impetuous students, investors need to be more concerned with the policy changes emerging from this room than with its personalities.

While many factors, such as inflation expectations and supply and demand, will impact interest rates, it's important to understand the Fed's role as well. The Fed's Federal Open Market Committee, currently chaired by Ben Bernake, regulates short-term interest rates with the aim of promoting economic growth (and thus employment) and stable prices (or modest inflation). To achieve those goals, the FOMC has three levers that it can pull: open market operations, the discount rate, and setting bank reserve requirements. Recently, investors have witnessed open market operations, in a series of fed-funds rate cuts (most recently a dramatic 0.75% drop to 3.5% on Jan. 22), as well as cuts to the discount rate

SAN FRANCISCO (AP) -- Yahoo Inc.'s financial funk deepened at the end of 2007, prompting the slumping Internet icon to draw up plans to lay off 1,000 workers.

The Sunnyvale-based company disclosed the upcoming 7 percent reduction in its 14,300-employee work force Tuesday while reviewing a 23 percent drop in fourth-quarter profit and a cautious 2008 outlook. The bad news sent Yahoo shares skidding to their lowest levels in more than four years.

In a prepared statement, Yahoo Chief Executive Jerry Yang warned of looming "headwinds," indicating that the company's tortuous turnaround efforts aren't likely to pay off this year.

Yahoo shares dropped $2.13, or more than 10 percent, in extended trading Tuesday after finishing the regular session at $20.81, up 3 cents. The company's market value has plunged more than 50 percent since the end of 2005, wiping out $35 billion in shareholder wealth.

Yang, Yahoo's co-founder, took over as CEO seven months ago in an attempt to shake things up, but his overhaul hasn't impressed Wall Street so far. The mass firings represent Yang's most dramatic move yet.

"This is a necessary step in our transformation," Yang said during the conference call.

Yahoo didn't specify which areas of its operations will be trimmed in the company's biggest purge since

WASHINGTON (AP) -- The FBI on Tuesday said it is investigating 14 companies for possible accounting fraud, insider trading or other violations in connection with home loans made to risky borrowers.

Agency officials did not identify the companies under investigation but said the wide-ranging probe, which began in spring 2007, involves companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors.

The Federal Bureau of Investigation is working in conjunction with the Securities and Exchange Commission on the corporate-fraud probe, said Neil Power, chief of the FBI's economic crimes unit in Washington.

As the nation's housing crisis worsens, there has been a dramatic spike in the number of mortgage fraud cases under investigation. An agency spokesman said 1,210 such cases are open, up from roughly 800 a year ago.

The announcement comes weeks after authorities in New York and Connecticut said they are investigating whether Wall Street banks hid crucial information about high-risk loans bundled into securities sold to investors.

Power said the FBI is looking into the practices of so-called subprime lenders, as well as potential