-Caveat Lector-
Begin forwarded message:
From: [EMAIL PROTECTED]
Date: August 18, 2007 9:46:16 PM PDT
To: [EMAIL PROTECTED]
Cc: [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED]
Subject: Yuppie Bank Panic
"Declining home prices, higher foreclosures, defaults in
credit card debt, a significant slowdown in consumer spending ...
And as home sales fall even further, ultimately the job market will
suffer too."
A rush to pull out cash
Worried about the stability of mortgage giant Countrywide Financial
bank, depositors crowd branches. In Laguna Niguel, Bill Ashmore
drove his Porsche Cayenne to the bank's office and waited half an
hour to cash out $500,000.
"It's got my wife totally freaked out," he said.
By E. Scott Reckard and Annette Haddad
August 17, 2007
http://www.latimes.com/business/la-fi-
countrywide17aug17,1,786787,full.story?coll=la-headlines-
business&ctrack=2&cset=true
Anxious customers jammed the phone lines and website of Countrywide
Bank and crowded its branch offices to pull out their savings
because of concerns about the financial problems of the mortgage
lender that owns the bank.
Countrywide Financial Corp., the biggest home-loan company in the
nation, sought Thursday to assure depositors and the financial
industry that both it and its bank were fiscally stable. And
federal regulators said they weren't alarmed by the volume of
withdrawals from the bank.
The mortgage lender said it would further tighten its loan
standards and make fewer large mortgages. Those moves could make it
harder to get a home loan and further depress the housing market in
California and other states.
The rush to withdraw money -- by depositors that included a former
Los Angeles Kings star hockey player and an executive of a rival
home-loan company -- came a day after fears arose that Countrywide
Financial could file for bankruptcy protection because of a
worsening credit crunch stemming from the sub-prime mortgage meltdown.
The parent firm borrowed $11.5 billion Thursday by using up an
existing line of credit from 40 banks, saying the money would help
the lender meet its funding needs and continue to grow. But stock
investors, apparently alarmed that the company felt compelled to
use the credit line, sent Countrywide's already battered stock down
an additional 11%.
At Countrywide Bank offices, in a scene rare since the U.S. savings-
and-loan crisis ended in the early '90s, so many people showed up
to take out some or all of their money that in some cases they had
to leave their names.
In West Los Angeles, a Countrywide supervisor brought in from
another office served coffee to more than 25 people waiting calmly
for their turn with the one clerk who could help them.
Bill Ashmore drove his Porsche Cayenne to Countrywide's Laguna
Niguel office and waited half an hour to cash out $500,000, which
he then wired to an account at Bank of America.
"It's because of the fear of the bankruptcy," said Ashmore,
president of Irvine's Impac Mortgage Holdings, which escaped
bankruptcy itself recently by shutting down virtually all its
lending and laying off hundreds of employees.
"It's got my wife totally freaked out," he said. "I just don't want
to deal with it. I don't care about losing 90 days' interest, I
don't care if it's FDIC-insured -- I just want it out."
Customers, most of whom said they were acting "just in case," said
they went to the lightly staffed branches because they couldn't get
through to the bank via its toll-free number or its slow-moving
website.
"I doubt it will go under, but I want to protect myself," said
Rogie Vachon, who was the Kings' most valuable player for several
years in the '70s. Vachon said he went to the West L.A. branch to
withdraw some money because his account balance exceeded the limit
on insurance provided by the Federal Deposit Insurance Corp.
In a statement, the bank said: "It is very important to remember
that Countrywide Bank is well capitalized, with FDIC-insured
deposits, and is one of the largest banks in the United States,
with assets over $107 billion."
The bank added that it had significant access to outside capital
and was still highly rated by debt-rating firms.
As for parent firm Countrywide Financial, the mortgage giant said
draining its credit line would allow it to continue operations
while refocusing its business on the "plain vanilla" mortgage loans
that can be sold to Fannie Mae and Freddie Mac, the government-
sponsored mortgage finance companies.
Countrywide said it planned to fund more mortgages through
Countrywide Bank and have the bank invest in certain loans that
Fannie Mae and Freddie Mac won't buy, such as "jumbo" mortgages,
which in California are defined as those over $417,000.
Countrywide recently was funding about $40 billion a month in
mortgages. Of those, about half qualified to be sold to Freddie Mac
or Fannie Mae, and half were "nonconforming" loans the agencies
don't buy, including sub-prime mortgages to higher-risk borrowers
as well as jumbo loans, which account for 43% of all mortgages
issued in Southern California.
Company executives declined to discuss how the heavy withdrawals at
Countrywide Bank branches Thursday might interfere with that strategy.
Mortgage industry executives, however, said that although
Countrywide Bank was the nation's third-largest savings and loan,
after Washington Mutual and Wachovia Bank's World Savings unit, it
was far too small to absorb the entire $20 billion a month in
nonconforming loans Countrywide Financial produced.
As a result, the company is likely to make fewer loans while
applying more stringent criteria in deciding who gets them -- a
transition that could further pinch the strained housing market.
In recent months, sales of high-end houses have been stronger than
those for cheaper homes. Now, with a pullback in larger loans by
Countrywide and other major lenders, the weakness at the low end is
likely to spread upward, said Esmael Adibi, director of Chapman
University's Anderson Center for Economic Research.
"The implication will be declining home prices, higher
foreclosures, a significant slowdown in spending by consumers," he
said. As home sales fall further, "ultimately job growth will
slowly deteriorate."
Those long-term concerns weren't the first thing on the minds of
depositors withdrawing money Thursday.
At a branch near Countrywide's corporate headquarters in Calabasas
on Thursday, a flood of spooked customers seeking to withdraw their
certificates of deposit and money-market accounts overwhelmed the
small staff.
The Countrywide employees were forced to resort to taking down
names and asking people to wait it out or come back later.
"I'm at the age where I can't afford to take the risk," a 69-year-
old retiree who asked not to be identified said after transferring
money out of his money market account. "I'll gladly put it back as
soon as I know the storm is over."
After reading news reports of Countrywide's troubles, Elsie Ahrens
of Calabasas decided to close two of her CD accounts at Countrywide.
"It's not worth it," said Ahrens, 42. "I don't think it's going to
go under, but you never know."
Ahrens, who runs a voice and data business, took her money and
opened a new account at Bank of America, which she said felt more
secure and offered a comparable interest rate.
In Laguna Niguel, Ashmore, the Impac Mortgage president, remarked
on how the credit problems stemming from sub-prime loans had
filtered down to a local bank branch.
"It started out with this global credit crunch we've been reading
about," he said as another Countrywide depositor left the bank's
office. "It's now gotten down to affecting people like him and me
who are closing our accounts."
The other depositor shook his head as he climbed into his car.
"It's all over," he said, and drove away.
--
[EMAIL PROTECTED]
[EMAIL PROTECTED]
Times staff writer Andrea Chang contributed to this report.
Get a sneak peek of the all-new AOL.com.
www.ctrl.org
DECLARATION & DISCLAIMER
==========
CTRL is a discussion & informational exchange list. Proselytizing propagandic
screeds are unwelcomed. Substanceânot soap-boxingâplease! These are
sordid matters and 'conspiracy theory'âwith its many half-truths, mis-
directions and outright fraudsâis used politically by different groups with
major and minor effects spread throughout the spectrum of time and thought.
That being said, CTRLgives no endorsement to the validity of posts, and
always suggests to readers; be wary of what you read. CTRL gives no
credence to Holocaust denial and nazi's need not apply.
Let us please be civil and as always, Caveat Lector.
========================================================================
Archives Available at:
http://www.mail-archive.com/ctrl@listserv.aol.com/
<A HREF="http://www.mail-archive.com/ctrl@listserv.aol.com/">ctrl</A>
========================================================================
To subscribe to Conspiracy Theory Research List[CTRL] send email:
SUBSCRIBE CTRL [to:] [EMAIL PROTECTED]
To UNsubscribe to Conspiracy Theory Research List[CTRL] send email:
SIGNOFF CTRL [to:] [EMAIL PROTECTED]
Om