Countrywide “on a collision course with bankruptcy”

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Good morning. Yes, more on Countrywide. No, not very good.

The L.A. Times this morning quotes Weiss Research, which rates the condition of lenders, as saying Countrywide Financial ‘is on a collision course with bankruptcy,’ adding that it ‘exhausted many of its extraordinary financing options last year and is ill-prepared for the rising mortgage defaults and home foreclosures that are widely expected this year.’

More: The Egan-Jones Ratings Co. says Countrywide is ‘withering’ and ‘might falter if it does not receive an infusion of at least $4 billion within the next couple of weeks.’ (Here’s one big problem with investing $4 billion in Countrywide today: The entire company is valued by investors this morning at just $3 billion; if you give them $4 billion, what do they give you? The entire company, and then what, an IOU?).

More from Weiss Research about a possible Countrywide bankruptcy, and what it might means for consumers, here, via Fox Business News. (See below for guidance on this item)

Lastly, the mischievous Charlie Gasparino at CNBC went surfing and found a speech Countrywide CEO Angelo Mozilo (pictured) gave back in 2003 in which Mozilo said, ‘Let’s look for every possible reason to approve (mortgage) applicants, not to reject them.’

Here’s the speech, in which Mozilo argues for easier credit standards. In fairness, Gasparino said this on CNBC this morning: ‘To make Angelo Mozilo the scapegoat here ... is ridiculous.’ Gasparino explains that, by his recollection, the push for lower lending standards and more sub-prime lending has its roots in the policies of the first Clinton administration.

Guidance on the Weiss Research item from Fox Business News: The link goes to a press release posted by Fox Business News, but not written by Fox. I’m never 100% comfortable with press releases as sources of analysis. I’m not familiar with Weiss Research, but of course my knowledge of the world is famously limited. Use your own judgment here.

Plenty to chew on here. Chew away. E-mail tips to peter.viles@latimes.com
Photo credit: L.A. Times
Hat tip: BB via email