this would be utter madness:
Aug. 15 (Bloomberg) -- Countrywide Financial Corp., the biggest U.S.
mortgage lender, fell for the fifth consecutive day on the New York
Stock Exchange after Merrill Lynch & Co. raised the possibility of
bankruptcy.
``Effective insolvency'' would result should creditors force
Countrywide to sell assets at depressed prices or investors lose
confidence in its ability to raise cash, Kenneth Bruce, a Merrill
analyst in San Francisco, said in a research note today.
Shareholders shouldn't ``understate the importance of liquidity,''
Bruce wrote. ``If liquidations occur in a weak market, then it is
possible for CFC to go bankrupt,'' said Bruce, who downgraded
Countrywide to ``sell'' from ``buy.'' The company trades under the
ticker CFC.
Countrywide's shares have lost almost half their value this year on
concern a credit crunch in the mortgage industry will erode profit at
the Calabasas, California-based company. KKR Financial Holdings LLC,
Scottish Re Group Ltd., and other companies tied to the mortgage
industry dropped today on concern earnings will be hurt by the crisis.
Bankers have curtailed lending to mortgage providers and demanded more
collateral, forcing more than 70 companies to seek buyers or shut
since the start of last year.
Countrywide dropped 8.1 percent to $22.47, and reached the lowest
level in almost four years, in New York Stock Exchange composite
trading at 1:33 p.m.
KKR Financial, which said it lost $40 million on the sale of $5.1
billion of mortgage loans, dropped 24 percent, or $3.67, to $11.60.
Scottish Re
Scottish Re said it was evaluating risks in its $3.1 billion of bond
holdings backed by subprime and so-called Alt-A mortgages, or those
made to borrowers who don't qualify for prime loans. Shares of the
company declined 87 cents, or 24 percent, to $2.82.
Newcastle Investment Corp. fell as much as 18 percent after Lehman
Brothers Holdings Inc. cut its ratings on shares of the real estate
investment trust. The stock rebounded, trading up 11 cents at $15.48.
Thornburg Mortgage Inc. rose 55 percent to $11.79, after the company
said it's moving closer to getting funding and has no plans to file
for bankruptcy.
The perceived risk of owning Countrywide's bonds increased, according
to credit-default swap prices that reflect bets on the company's
credit quality. Countrywide five-year credit swaps climbed as much as
65 basis points to 440 basis points, according to broker Phoenix
Partners Group in New York.
Countrywide Assurances
Last week, Countrywide said it had access to about $187 billion in
credit. Chief Executive Officer Angelo Mozilo assured investors that
the company has enough cash to cope with the market turmoil, and said
it may even benefit as competitors are forced out of business.
``We continue to think the company can survive a period of secondary
market instability,'' Bruce said in his note. ``However, the steps
that it would take to preserve shareholder value would be expensive,
likely leading to further share price declines from here.''
Amber Cousins, a spokeswoman for Countrywide, didn't return calls
seeking comment. Carrie Gray, a spokeswoman for Merrill Lynch,
declined to make Bruce available for comment.
``They do have a number of sources of liquidity,'' said Frederick
Cannon, an analyst at KBW Inc. in San Francisco. ``They're not just
dependent on Wall Street, they do have a large bank,'' which can
access other forms of financing, he said. Cannon rates the stock
``market perform.''
`Severe Contraction'
Bruce said in his report that the ``severe contraction'' in liquidity
is surfacing in almost every type of asset. He cited Coventree Inc.,
the Canadian investment bank that yesterday sought emergency funding
after investors declined to buy its debt. The company later said it
found buyers for C$600 million ($557 million) of the securities.
Coventree's problem may spread to the U.S., Bruce said.
``We hesitate to use the word contagion, but this market is feeling
awfully similar to the fall of 1998,'' he said, referring to the
market crisis that resulted from Russia's debt default and the
collapse of hedge fund Long-Term Capital Management LP.
To contact the reporter on this story: Elizabeth Hester in New York at
ehester@bloomberg.net .
RE: countrywide?
WaMu was heavy into subprime as well ... I remember there was a small
run on their banks in late summer, but I think they received a capital
infusion at the time ...
not sure what their deal is right now ...
man, the economy looked real bad yesterday ...
On 1/9/08, TragicHipster <> wrote:
> > feeling it, and I've been told to watch for part two of the auto
> > industry crisis ...
>
> what's the story on that?
>
> > WCI Communities, Tousa, Buffets Inc., which owns Old Country Buffet,
> > NovaStar, just to name a few we're watching ... a good time to be a
> > shorter on stocks ...
>
> yeah, i wish i had the dough to play that sort of game. i'd be up big
> time since august if i did.
>
> washington mutual is down 8% today and Countrywide another 6.5%
>
> What's the deal with WaMu?
>
RE: countrywide?
> feeling it, and I've been told to watch for part two of the auto
> industry crisis ...
what's the story on that?
> WCI Communities, Tousa, Buffets Inc., which owns Old Country Buffet,
> NovaStar, just to name a few we're watching ... a good time to be a
> shorter on stocks ...
yeah, i wish i had the dough to play that sort of game. i'd be up big
time since august if i did.
washington mutual is down 8% today and Countrywide another 6.5%
What's the deal with WaMu?
RE: countrywide?
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RE: countrywide?
well, after getting a capital infusion of $50 billion during the
august panic, countrywide (CFC) may end up going belly-up anyway.
stock has tanked 20% today and trading was briefly halted.
http://www.reuters.com/article/hotStocksNews/idUSN0849766020080108
NEW YORK (Reuters) - Countrywide Financial Corp (CFC.N: Quote,
Profile, Research) on Tuesday denied market speculation it might seek
bankruptcy protection, after shares of the largest U.S. mortgage
lender slid to their lowest level in nearly eight years.
RE: countrywide?
if they file, that's WorldCom Pt. 2
More like EnronCom!
RE: countrywide?
one source told me today Countrywide is going to be the next Enron ...
not only is is spiraling into default, but once it hits the courts a
lot of bad stuff is going to come to light ...
a bunch of companies are hanging on for dear life right now because
banks are just not lending money anymore unless you have some real
prospects for reversal of performance ... and as loans come due, these
companies, especially homebuilders who are getting jacked, don't have
any cash flow to pay their debt obligations ... retailers are also
feeling it, and I've been told to watch for part two of the auto
industry crisis ...
WCI Communities, Tousa, Buffets Inc., which owns Old Country Buffet,
NovaStar, just to name a few we're watching ... a good time to be a
shorter on stocks ...
On 1/8/08, R F wrote:
> Lol, they just opened a 400+ person call center in the bussiness center a
> block from me in Hatboro!
>
> -r
>
>
> On Jan 8, 2008 1:47 PM, TragicHipster <> wrote:
> > well, after getting a capital infusion of $50 billion during the
> > august panic, countrywide (CFC) may end up going belly-up anyway.
> >
> > stock has tanked 20% today and trading was briefly halted.
> >
> >
> http://www.reuters.com/article/hotStocksNews/idUSN0849766020080108
> >
> > NEW YORK (Reuters) - Countrywide Financial Corp (CFC.N: Quote,
> > Profile, Research) on Tuesday denied market speculation it might seek
> > bankruptcy protection, after shares of the largest U.S. mortgage
> > lender slid to their lowest level in nearly eight years.
> >
> > --
> >
> >
> >
> >
>
> >
> >
> >
> >
>
> >
> >
> >
>
>
>
>
> ________________________________
>
>
>
>
>
> View online members-only section:
>
>
>
RE: countrywide?
hey! been at court all day for Delphi ... they're looking to pull out
of Chap 11 in Sept ..
on the other hand, Countrywide ... that's insane ... I haven't heard
whether they're going to file or not but $11 billion emergency funding
... that's craziness right there ...
if they file, that's WorldCom Pt. 2 ...
On 8/16/07, TragicHipster <> wrote:
> Yo, CW, where you at? What's the word?
>
> I just got word from my sister that works in the mortgage business:
>
> The shit is hitting the fan - mass panic - Cwide just had to borrow 11
> billion dollars to fund loans - that is nothing in this business and will
> not last long- they are filing for BK - that is exactly the same path as
> New Century - its bad real bad
>
RE: countrywide?
Yo, CW, where you at? What's the word?
I just got word from my sister that works in the mortgage business:
The shit is hitting the fan - mass panic - Cwide just had to borrow 11
billion dollars to fund loans - that is nothing in this business and will
not last long- they are filing for BK - that is exactly the same path as
New Century - its bad real bad
RE: countrywide?
You know, if someone asked me what the problem is with the markets,
and I had to succinctly give an answer, I'd say that there is a lack
of information available to investors.
Here's what I mean...
Basically, you have all these investors holding all of these debt
instruments. At one point in the past, they'd sit down and say that
this bundle X of mortgage is worth Z units of money. And they'd sell
it and someone would make a profit.
Now, normally, when you have market conditions that are negative, the
Z value of an asset gets reduced. So, instead of a debt instrument
being worth $100, its worth $90. Or, in a really bad situation, it
might be worth $10, which of course would represent a 90% decrease in
value of whatever it is you're selling.
In the case of a house, you may have a house that's worth, according
to experts and banks and such... let's say $500,000. The economy goes
bad, you don't take care of the house, whatever, and its value goes
down to $450,000 or $350,000 or whatever. The house price, of course,
being determined by supply and demand. And the lower price being a
percentage of what the original value was, thus a loss.
In the case of all of these subprime loans, and now the broader real
estate market, the problem is not large losses -- its simply that
people aren't trading. Everything has come to a screeching halt. I
mean, heavy losses are one thing, but having the credit markets of the
United States cease function, jeezus, that's a whole other level.
I think the reason why this is happening is that these large
institutions don't really have a handle on valuation at this point.
They know there are issues and rising defaults, but a lot of hedge
funds (ok, most) and a lot of mortgage lenders have pretty much
obscured the workings of their investments and have hidden their true
exposure over the past several years. That's fine and all, but then
fear takes over and everyone is running around, bumping into each
other in the dark. Thus, the credit markets are barely functiong at
the moment and there doesn't seem to be much that will change that in
the very short term.
On that note, the Countrywide Mortgage death spiral continues...
http://biz.yahoo.com/ap/070816/countrywide_mortgages.html?.v=8
Apparently they went hat in hand to 40 banks overnight requesting
loans so they can continue operating. That's so not good.
Meanwhile, the Fed said that unless there was a "calamity" of some
sort, there wouldn't be a rate cut. That statement was utterly
ridiculous. They've painted themselves into a corner. Now everyone
knows that if the fed acts, then its really is armageddon and you will
get the full on apocolyptic scenario that everyone is trying to avoid
at the moment.
http://biz.yahoo.com/rb/070816/usa_fed_poole.html?.v=1
Also, word has it, and I don't have a link at the moment, that the fed
injected more liquidity into the system last night by way of the
purchasing of mortgage back securities -- they are simply monitizing
the debt, or better put, they are printing the money at this point.
There is a panic at the fed and they are dealing with it by bailing
out (and socializing) this deflationary death spiral that the credit
markets are now suffering through.
We're probably going to continue stumbling along but if either the fed
does panic and lower rates or Countrywide does go belly-up, then it
really will be a day of reckoning.
In the meantime, ITS A G*DD*MN SHAME we don't have any political
leadership to step out in front and calm down the markets. The
capitalist system is largely driven by fear and greed. And at the
moment, fear rules the day, do doubt about it. In reality, these debt
instruments do have value, even if it is far less than what was
previously valued at. There is no rational justification for the
cessation of lending in the mortgage markets. Someone needs to get
their head out of their ass and tell everything is going to be ok. Its
all psychological in moments like this. There simply isn't any
rationality to what's going on.
This could be an excellent buying opportunity or the first wave of a
tsunami. It'll depend upon the political and financial leadership of
the country to pull us through this. Keep your fingers crossed, yo.
RE: countrywide?
It gets worse and worse for Countrywide....
http://biz.yahoo.com/ap/070816/wall_street.html?.v=16
Countrywide fell $3.74, or 17.6 percent, at $17.55 after the mortgage
lender borrowed $11.5 billion from a group of 40 banks to fund loans,
in a move that shows just how deep the lending crisis has become. The
company has been slammed as the credit crunch has driven a number of
its smaller peers to bankruptcy.
What's today's word on the street, Chris w?
RE: countrywide?
This says it all:
The question now for stock investors is how much of the financial
services sector's profits - and how much of U.S. economic growth -
will be swept away by a credit market where assets are currently being
priced at steep discounts.
Now we'll just wait 6 months and see what happens.
Hey, what happened to Iran?
RE: countrywide?
here's a fairly dire perspective, relating to Merrill giving up on Countrywide:
http://www.marketwatch.com/news/story/marketwatch-first-take-merrills-re...
On 8/15/07, TragicHipster <> wrote:
> Yeah, from what I've heard from people in the business, a bankruptcy
> of Countrywide would spell Armageddon.
>
> Things are still in flux, and probably will be for months, but for the
> moment the market seems somewhat stable.
>
RE: countrywide?
Yeah, from what I've heard from people in the business, a bankruptcy
of Countrywide would spell Armageddon.
Things are still in flux, and probably will be for months, but for the
moment the market seems somewhat stable.