Countrywide Denies Bankruptcy Rumors
Updated from 2:03 p.m. EST
Countrywide Financial (CFC) denied rumors that it was on the verge of bankruptcy Tuesday, as the mortgage giant's stock traded below the $10 mark for nearly the entire afternoon.
In a statement released shortly before the market's close, Countrywide said it continues to have "ample liquidity and capital and will be a beneficiary of ongoing mortgage market consolidation."
The Calabasas, Calif.-based company said as of Oct. 31 it had $35.4 billion worth of "highly reliable liquidity," up from $33.6 billion in September. Countrywide Bank also has enough liquidity available "to meet its projecting operating and growth needs" and has significant contingent liquidity to meet evolving market conditions."Countrywide shares closed down 2.7% to $10.28 Tuesday, after dipping as low as $8.21 during the trading day. The stock is down nearly 15% for the week and 50% since the Oct. 1 close. Aside from the bankruptcy rumors, shares were hit hard by an analyst downgrade on worries about government-sponsored mortgage giants Freddie Mac (FRE) and Fannie Mae (FNM). Fox-Pitt, Kelton analyst Howard Shapiro said the nation's largest mortgage lender's viability to remain in business is likely in jeopardy if Freddie and Fannie -- both beset by third-quarter losses -- are not able to purchase its loans. Shapiro downgraded the stock to in line from outperform, in a note titled "The Lifeline is Withdrawn."
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