Thursday, August 16, 2007

Countrywide facing serious issues, including bankruptcy

Credit crunch imperils lender - Los Angeles Times

This is worse than I had imagined it could get.
At some branches, managers would buy lunch every day for their staff to keep them at their desks working. One manager at a branch in Van Nuys was known to keep a case of Red Bull by his desk for employees to tap when their energy flagged.
Like in the dot-com boom and bust...
More than one-third of all mortgages sold to Fannie Mae comes from Countrywide.
Nothing like the government putting a lot of eggs in one basket!
A bailout of Countrywide would make the government's efforts to save automaker Chrysler in the 1970s look puny.
Especially since Chrysler is doing so well now (not). It seems to me that Countrywide should be allowed to fail...and Fannie Mae should have to carry the debt, at whatever terms they can negotiate with mortgage holders. It may mean that other mortgage companies could service the debt and be given appropriate (i.e., fair) compensation for doing so with zero risk.

Could be a windfall for banks like Washington Mutual, Bank of America, and Wells Fargo.