Countrywide Financial, the nation’s leading mortgage lender, is suffering a liquidity crunch as a result of doling out risky subprime loans in the past few years. The company announced today that it will borrow $11.5 billion in order to keep making home loans. “The announcement sent its stock tumbling about 11 percent and prompted one credit rating agency to downgrade its rating to near-junk bond status.”
A Countrywide spokesman said, “Management is completely focused on running the business in a changing environment.” Unfortunately, Countrywide isn’t taking the necessary steps to prioritize its spending and maintain its solvency.
This afternoon, CNBC ran a report on Countrywide which stated the company was “suffering a perfect storm of bad news.” Moments after that piece aired, a Countrywide commercial appeared on the CNBC network. “Homeowners, wanna refinance and get cash? Countrywide has a great reason to do it now,” the ad blared. Watch it:
Countrywide made one out of every six home loans in the U.S. in the first half of this year. If the company were to declare bankruptcy, “it would be a huge shock to the U.S. housing system and the mortgage system as perceived around the world.” If Countrywide is serious about surviving the market downturn and ensuring the stability of its loans, it should stop wasting much-needed funds on TV ads.
UPDATE: Media Biz notes that Countrywide is also going on an internet ad spending spree.