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E*Trade Bounces Back

Shares finish down just over 3% after an earlier 22% drubbing.

E*Trade Financial

(ETFC) - Get E*TRADE Financial Corporation Report

bounced back from a steep selloff Thursday after the online broker said its "financial health ... is sound."

Shares of the online broker closed down 3% after earlier dropping as much as 22% amid worries about a possible writedown. Ratings agency Egan-Jones downgraded E*Trade debt to to B+ from BB-, saying the value of E*Trade's $46.1 billion of mortgages and loans receivable "probably needs to be marked down."

An E*Trade spokeswoman said in a statement that the company has not seen any "material changes to date with respect to wholesale funding availability, pricing or margin, including repurchase agreements."

She also denied a rumor that the brokerage firm was freezing accounts.

"We continue to reiterate that while the volatility of the mortgage industry does impact us, the financial health of the company is sound," the spokeswoman added. "We believe the fear reflected in the current market capitalization is unfounded and are working diligently with investors to reassure them of the franchises' strength."

E*Trade's stock closed down 36 cents to $13.55.

The news comes as financial companies are hit by deepening troubles in the credit markets.

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Countrywide Financial


, the largest independent lender, saw its shares fall 19% Thursday after said it drew down an $11.5 billion unsecured credit line. Fears festered in the markets that Countrywide could go bankrupt.


Charles Schwab

(SCHW) - Get Charles Schwab Corporation Report

experienced some technical problems with its online trading system.

"We are experiencing some issues with sporadic instances of people not being able to get on," said Greg Gable, a Schwab spokesman, said. He could not estimate how many customers were affected.

The problem was fixed around 3:10 p.m. EST, Gable said.

Shares closed up 91 cents, or 5%, to $19.04.