Countrywide Waves Off Call for Probe

Countrywide Financial(CFC Quote) on Tuesday brushed off criticism of more than $50 billion in advances made to its struggling bank by a government-sponsored institution.

The nation's largest mortgage lender, during a previously scheduled presentation in New York, said it is in "full compliance" with the collateral requirements of the Federal Home Loan Bank of Atlanta. In a letter Monday, U.S. Sen. Charles Schumer (D., N.Y.) called for a federal probe of the advances, saying the poor quality of loans Countrywide put up as collateral "may pose a risk to the safety and soundness of the FHLB system as a whole."

David Bigelow, Countrywide's managing director of investor relations, said the lender is very familiar with the collateral requirements of the FHLB through its long-standing relationship with the quasi-government agency.

"The FHLB has some experience in risk management, and they probably have some idea what they're doing in terms of their lending activities," Bigelow said during a scheduled presentation at the FBR Capital Markets conference, according to Reuters.

Bigelow also reiterated that the company has "adequate liquidity" to fund growth and operating needs, addressing persistent rumors that the company is on the verge of bankruptcy that sent the stock below $10 last week.

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, Schumer said.