Shares of Countrywide continued their slide Wednesday as rumors of bankruptcy festered following a downgrade from Fox-Pitt, Kelton analyst Howard Shapiro Tuesday.
“The rumors are absolutely false,” said Rick Simon, a spokesman for Calabasas, California-based Countrywide Financial.
Tuesday night, Countrywide quickly reached out to investors, stating that, “Countrywide Bank … has sufficient liquidity available to meet its projected operating and growth needs and has accumulated significant contingent liquidity in response to evolving market conditions.”
The troubled mortgage lender said it had $35.4 billion in “highly reliable liquidity” available as of Oct. 31, 2007, up from $33.6 billion in September.
The question remains whether anything is “highly reliable” in this market, as many other banking giants who claimed everything was under control quickly changed their tune when record losses were announced.
“We’re here and most are not,” Countrywide Chief Executive Angelo Mozilo said in a telephone interview. “I think we can come out of the other side of this thing, certainly stronger and more mature than ever.”
Sure they’re around, but look for Countrywide to dump their wholesale and correspondent lines in the near future if liquidity concerns persist.
To be honest, I’m surprised they haven’t already, as liquidity issues were evident several months ago.
Also keep in mind that there’s no guarantee Bank of America will scoop up Countrywide, even at a huge discount.
There’s still the possibility that Bank of America will only pick up certain pieces of Countrywide, such as its servicing portfolio.
I’m also curious if Countrywide still believes it will be profitable in the fourth quarter, as it mentioned after its third-quarter earnings were announced several weeks ago.
Shares of Countrywide were down 82 cents, or 7.98%, to $9.46 in late afternoon trading on Wall Street.
Read the original post regarding a possible Countrywide bankruptcy from August.
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