Schumer: Probe Countrywide Advances

U.S. Sen. Charles Schumer on Monday called for federal regulators to probe more than $50 billion in advances made by the Federal Home Loan Bank of Atlanta to troubled mortgage giant Countrywide Financial(CFC Quote).

In a letter dated Nov. 26 to Chairman Ronald Rosenfeld of the Federal Housing Finance Board, Schumer (D., New York) expressed "serious concern" that loans Countrywide Bank was pledging as collateral for those advances "may pose a risk to the safety and soundness of the FHLB system as a whole."

FHLB Atlanta has made $51.4 billion in advances to Countrywide Bank as of Sept. 30, Schumer wrote, citing the most recent Securities and Exchange Commission filings. The amount represents 37% of the bank's total outstanding advances and the $62.4 billion in loans Countrywide has put up as collateral represents 78% of its total mortgage holdings, Schumber said.

"I find these numbers alarming as reports continue to emerge about how Countrywide's reckless and predatory lending practices were a leading contributor to today's foreclosure crisis," Schumer wrote in calling for the probe.

Countrywide, the nation's largest mortgage lender, has been plagued by poor bets on loans to borrowers with less-than-stellar credit since the subprime mortgage market blew up earlier this year. Shares dipped 10.5% to $8.64 on the news Monday afternoon.