Countrywide Possibly Exposed For $1Bln on New Century BK?

Posted 2007-04-04 15:49
by Karl Denninger

Tough to know, but there's a story out over in the UK (funny how its not being run HERE) that says the following:

"Although the amounts that the banks are owed are not revealed in the New Century’s Chapter 11 filing, analysts believe that Barclays has lent about $1 billion to the collapsed bank and had been seeking to withdraw its loan before yesterday’s bankruptcy.

The creditors’ list is a who’s who of Wall Street bankers, with Credit Suisse at No 2, Morgan Stanley at No 4 and Deutsche Bank, Bank of America, UBS and Lehman brothers also in the top ten.

Worryingly for the health of the entire US sub-prime market, Countrywide Financial, another sub-prime lender, is the No 10 creditor.

Shares in Countrywide, America’s biggest mortgage lender, were hit last night by growing fears over sub-prime lending and it emerged that two directors had quit its board.

Kathleen Brown, who is also a Goldman Sachs executive, left late last Friday without any explanation. Michael Dough-erty, another board member, is not standing for reelection at the company’s next annual meeting."

Source: Times Online UK

How much exposure is there? It's impossible to know.

Much of this is probably collateralized by the loans. Of course if anywhere from 16-25% of them are worth nothing (or being associated with a BIG loss), being either in default or about to default.....

The not-so-amusing part of this is that none of the lenders identified in the Bankruptcy Filing, save Barclays, has said much of anything about this. More specifically, the lenders - CFC and NDE - have said nothing at all.

One has to wonder - just how far out there are these guys on the plank, and more importantly, exactly how intertwined are these lenders with all of these deals?

Are we going to find out only after one of these guys goes down under a balance sheet implosion?

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