Countryslide Watch

[flashl]

Bankruptcy fears deepen at lender

Countrywide Financial Corp.'s future was called into question again Wednesday after it reported another rise in loan delinquencies and foreclosures, fueling fresh speculation that the company was headed toward bankruptcy.

The nation's biggest mortgage lender was "withering" and "might falter if it does not receive an infusion of at least $4 billion within the next couple of weeks," said Egan-Jones Ratings Co., an advisor to pension funds and other big investors.

LA Times - Read Full Text

Countrywide Says Foreclosures Highest on Record

Analysts attributed Wednesday's drop to deteriorating credit quality reflected in Countrywide's monthly operating report, and renewed concern the lender might not survive the housing crunch and could seek bankruptcy protection. On Tuesday, Countrywide rejected bankruptcy rumors.

"Virtually no one in the market is willing to cast a vote of confidence in this company's ability to extricate itself from its current heap of trouble," options analyst Rebecca Engmann Darst of Interactive Brokers Group wrote in a report.

Reuters - Read Full Text

It seems that it is important for the finance sector that Countryslide maintains perception of stability.

[ChairmanAgnostic]

1. they made their bed. Let them lie with the fleas.

besides, with the litigation going on elsewhere, their biznes practices look both predatory and inept. they have taken to making stuff up in federal court. That's a no no in any court.

[Warpy]

5. The problem is that they made a lot of beds

and distributed the fleas and bedbugs all over the place. We're all going to get badly bitten before this one is over.

Countrywide just wrote the loans. Most of those loans were off their books ASAP, sold mostly to hedge funds who snipped them up into "tranches" of CDOs that were assigned varying degrees of risk. They then sold all those to banks, brokerages, pension funds, states, insurance companies, and even corporations who were looking for easy ways to goose their paper profits.

Oh, their management will end up being screwed for fraud. Writing loans they knew to be bad ones to customers who had absolutely no hope of making any but the first half dozen payments (if that) in order to make money on the closing costs and commission when they sold the bad loan to a hedge fund was the scam. It pumped the comps and got a house off somebody's books for six months to a year. The bill for that kind of fraud is going to keep coming due for many years down the road.

Remember, those jumbo loans they wrote for clerical workers and lettuce pickers will continue to reset all through 2009. Housing stock on the market will continue to increase, although the smarter banks and brokerages will convert it to rental housing, get it off the books, and get at least some money out of it. House prices will continue to fall as people find themselves owing half a million on a house that's worth a third that much and walk away.

Countrywide will take the fall for what was a national problem, an institutional problem brought on by the massive deregulation of the banking industry during the Reagan/Poppy years and uncorrected during the Clinton years.

[Adsos Letter]

2. YAY! I GET MY HOUSE FREE...!!!

...oh, wait...

[ixion]

3. and by 'infusion' I guess they mean a hand out from the taxpayers

who are already getting soaked by the loans issued by Countrywide.

Gee, I could use an 'infusion', too, but I'll guess we won't be seeing any taxpayer infusions coming any time soon. :eyes:

Funny how the "pro-business" types rail at allowing taxpayers to use their own taxes, but have no problem giving those taxes to businesses whose poor business practices caused them to meltdown.

[flashl]

4. Some timelines ...

A rush to pull out cash

Aug. 2007

Unsure about the future of home-loan giant Countrywide, bank customers line up to withdraw their money.

Anxious customers jammed the phone lines and website of Countrywide Bank and crowded its branch offices to pull out their savings because of concerns about the financial problems of the mortgage lender that owns the bank.

Countrywide Financial Corp., the biggest home-loan company in the nation, sought Thursday to assure depositors and the financial industry that both it and its bank were fiscally stable. And federal regulators said they weren't alarmed by the volume of withdrawals from the bank.

Read Full Text

Your Tax Money at Work

Nov. 1, 2007

How about the Federal Home Loan Banks? These banks were established during the Great Depression to provide funds to make mortgages more affordable. Yes, that's right the Great Depression. They have $1.15 TRILLION of debt out standing! Here is the excerpt from Bloomberg.

To meet the sudden demand, the institutions sold $143 billion of short-term debt in August and September, according to the FHLBs' Office of Finance. The sales pushed outstanding debt up 21 percent to a record $1.15 trillion, an amount that may become a burden to U.S. taxpayers because almost half comes due before 2009.

So who is taking all the risk for all this debt? You guessed it! It's the tax payers. We subsidize the Financial Institutions (As per the article, it saved private banks about $1billion).

Read Full Text

Countrywide and Federal Home Loan Bank in Atlanta

Nov. 26, 2007

The FHLB in Atlanta says they are lending huge dollars and doing it "safely". Considering no one else is willing to lend to Countrywide ...

Countrywide is reaching the ceiling of their collateral. Countrywide says they are opening more kiosks to solicit CD and money-market accounts. If they don't get that additional funding from those accounts? I guess Mozilo does not need to worry, the FHLB is there to bail them out.

The truly scary thing about the FHLB is that Countrywide is not their biggest borrower. They are Citigroup and Washington Mutual!

Read Full Text

[A HERETIC I AM]

6. Don't count em out just yet. Bank Of American might buy them.

Shares of Countrywide spiked up at 2:15 this afternoon when news was released that Bank Of America had entered talks about a possible purchase of the company. CFC spiked from $5.49 to $8.00 on this news.

http://www.marketwatch.com/news/story/bank-america-talks-buy-countrywide/story.aspx?guid=%7B8DEEF979%2D4E9C%2D44BE%2DB35C%2D66AB430A6EED%7D

[flashl]

7. You were on it ....

Bank Agrees to Buy Troubled Loan Giant for $4 Billion

Bank of America announced Friday that it has agreed to pay about $4 billion in stock to acquire Countrywide Financial, the troubled lender that became a symbol of the excesses that led to the subprime mortgage crisis.

"Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation’s premier lender to consumers," Kenneth D. Lewis, Bank of America’s chairman and chief executive officer, said in a statement.

The statement, published on the bank’s website, said that the agreement had been approved by the boards of directors of both Bank of America and Countrywide and was subject to approval by Countrywide’s shareholders and regulators.

According to the agreement, Countrywide shareholders would receive 0.1822 of Bank America stock for each Countrywide share.

"We believe this is the right decision for our shareholders, customers and employees," Angelo R. Mozilo, Countrywide’s chairman and chief executive officer, said in the statement. "Bank of America is one of the largest financial institutions in the U.S. and internationally, and we are confident that the combination of Countrywide and Bank of America will create one of the most powerful mortgage franchises in the world."

NY Times - Read Full Text

It is interesting that BoA seems to be in a mode of 'disappearing' mortgage lending predators.

[flashl]

8. Mo merger rumors

Countrywide's Gain Is Market's Loss

There were also more merger rumors in the financial sector Thursday morning, as reports surfaced that JPMorgan Chase, the No. 3 U.S. bank behind Citigroup and Bank of America, may be in early talks to acquire Washington Mutual, the largest U.S. thrift.