The week Wall Street went into meltdown
The day starts unhappily with the news that a Merrill Lynch analyst has put out a sell recommendation on Countrywide, the biggest source of mortgage loans in America, which even discusses the circumstances – the evaporation from a panic-stricken capital market of the liquidity Countrywide needs to fund its holdings of mortgages and the difficulty of selling on any of those assets not eligible for guarantee by Fannie Mae and Freddie Mac – in which it might go bankrupt.
The stock loses 13% in a day, taking it down 50% for the year.
Even though problems in the mortgage sector are hardly news, even though something about Countrywide’s perma-tanned CEO has never gained Wall Street’s unqualified respect, even though any financial company could go bankrupt in the circumstances Merrill describes, this company provides more than one in six American mortgages. Simply writing down...
