Tuesday, January 8, 2008

Countrywide: How many days are left?

Countrywide Financial (CFC) came out today denying rumors that the firm had filed for bankruptcy protection. The stock dived 25% on the reports causing a halt in trading for a period of time.

At this point many analysts believe that either bankruptcy or selling the firm for pennies on the dollar is inevitable. The only question is “How many days are left?”

Another concern that has been raised in Congress is the recent large-scale borrowing of Countrywide from federal bank sources; in many reports cited at $50 billion or more. Apparently this level of funding was not enough to bail out CFC, increasing the likelihood that taxpayers will end up holding the bag.

Countrywide Denies Bankruptcy Rumors

Once again – I will urge depositors to withdraw their funds above the FDIC limit from this institution. The risk of losing your money is increasing rapidly for those who bank at Countrywide. Note that this concern does not impact households where Countrywide simply holds their mortgage, so there is no need to re-finance your loan due to the financial troubles at CFC.