This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Countrywide Denies Bankruptcy Rumors

Shapiro's downgrade also comes one day after shares of Countrywide plummeted nearly 13%, as market participants refreshed concerns about the Calabasas, Calif.-based company's liquidity, which may not be ample enough .

Shapiro says that the mortgage crisis could indeed get worse after Freddie's announcement.

"Freddie Mac and Fannie Mae have provided essential liquidity in a time of crisis," he wrote. "Now that that liquidity function has essentially been withdrawn, it will mean, in our opinion, a further exacerbation of the housing downturn, even less credit available and steeper downturns in home prices. At this point, some kind of policy response is absolutely essential, in our opinion."

Freddie Mac's news is troublesome because it is one of the largest purchasers of residential mortgage loans. These loans are considered less risky, because the GSEs require strict documentation on the mortgages and do not purchase some of the more exotic loans that were created in the last few years, such as negative amortization loans and other subprime loans.

The big mortgage finance firm's ability to purchase loans is particularly important these days, as the market in which Wall Street firms purchase mortgages in order to create securities and other complex instruments from the pools of loans remains frozen for the most part. As the market for mortgage-backed securities seized up this summer, it forced lenders to retract from the originate-and-sell business model and concentrate only on originating loans that could be sold to the GSEs.

On Monday, Countrywide CEO Anthony Mozilo appeared to be upbeat during a phone interview with Bloomberg. "I'm grateful I had the team here when I did," he said, according to the wire service. "So I think we can come out of the other side of this thing, certainly stronger and more mature than ever."

3 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs