COUNTRYWIDE FINANCIAL: LARGEST U.S. MORTGAGE LENDER MAY FILE FOR BANKRUPTCY
August 16th, 2007Via: Bloomberg:
Countrywide Financial Corp., the biggest U.S. mortgage lender, fell 13 percent, the most since the 1987 stock-market crash, after Merrill Lynch & Co. raised the possibility of bankruptcy.
“Effective insolvency” would result if 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 Calabasas, California-based 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.
