Countrywide says it has plenty of capital to continue amidst current credit crunch

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Countrywide, whose stock tumbled to just $10 today, said in a statement that management believes the company has ample liquidity to continue operations and growth for the foreseeable future. Rumors of another Countrywide squeeze cropped up after Fannie Mae and Freddie Mac shed some light in to their exposure to lending risks. Those announcements seemed to suggest that the GSEs would need to scale back their re-purchase and securitization efforts to reign in some of that risk. That doesn’t bode well for Countrywide who has repositioned themselves to be a GSE seller (as opposed to the private loan market which is still relatively dead).

From our friends at Market Watch:

“Countrywide’s survival strategy has depended on access to the secondary markets through GSE purchase and re-securitization. That strategy is less viable in an atmosphere where the GSEs themselves are capital constrained and may need to shrink,” Fox-Pitt, Kelton analyst Howard Shapiro wrote on Tuesday.

Countrywide addressed concerns issuing this statement:

CALABASAS, Calif., Nov. 20 /PRNewswire-FirstCall/ — Countrywide Financial Corporation (NYSE: CFC) today commented on its financial condition. Consistent with the commentary provided in connection with the Company’s third quarter 2007 earnings conference call held on October 26, management continues to believe that Countrywide has ample liquidity and capital and will be a beneficiary of ongoing mortgage market consolidation.

The Company disclosed that it had $35.4 billion in highly reliable liquidity available at October 31, 2007, up from $33.6 billion available at September, 2007. Countrywide Bank, the Company’s primary operating entity, has sufficient liquidity available to meet its projected operating and growth needs and has accumulated significant contingent liquidity in response to evolving market conditions. Countrywide Home Loans is expected to service debt maturities beyond 2008 without additional debt issuance. In addition, the Company reiterated that it has excess regulatory and credit-rating agency capital.

It is noteworthy that Moody’s Investors Services yesterday confirmed Countrywide’s investment grade credit ratings. The Company and its subsidiaries also enjoy investment grade ratings from the other major credit rating agencies, Standard & Poor’s and Fitch Ratings.

My take: any time you need to reassure anyone it’s probably not the best sign. What do you think?