Mortgage lender Countrywide
The press release from the company makes it clear that the company's operations aren't anywhere near the status quo, because of the current tightness in the credit and commercial paper markets. And the action has already been interpreted as a negative by Moody's
Countrywide has been vilified in the media lately because of its large amount of originations in subprime loans, jumbo loans, and other loans that don't conform to the standards of the traditional loans that Fannie Mae
Countrywide, however, is a diverse business that also does prime and conforming loans, operates a bank, and retains the servicing rights on most of the loans it originates. All of these other operations provide the company with streams of cash that are generally more predictable, far more so at the moment. In short, it isn't quite the same situation as Accredited Home Lenders
Countrywide's survival depends on how long the current situation persists. I don't have a horse in that race, but my colleague David Meier thinks it's a possibility that Countrywide still had some liquidity available before drawing down its credit line. To me, that means the company felt it needed some extra cash on hand, because it saw a decent probability that problems in the credit markets will persist long enough to make things very uncomfortable for it. How much time Countrywide bought itself is the next big question for investors to explore. With the shares down 20% today, investors either think not very long or have no idea.
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Nathan Parmelee thinks the general sell-off in financial services is creating some great opportunities. He's made a couple purchases, but has no ownership stake in any of the companies mentioned here. The Motley Fool has an ironclad disclosure policy.