More Cuts at Countrywide & More Bad News

Countrywide's stock price fell below the deal price set when Bank of American injected $2 billion into the company today. It didn't stay below the magic $18 price, closing at $18.48. This comes as news of 900 more lay-offs at the company follow 500 from the previous month.

Not a big shocker here. Countrywide will continue to lay-off staff in the coming months. The company employs some 60,000 people and was actually increasing their staffing up until July of this year. Not too smart for a company that ran smack dab into liquidity problems. And why do I expect more layoffs? The company continues to assert that most of their business will be underwritten to Fannie and Freddie guidelines. For the most part, that is considered A paper. Countrywide is/was the largest sub-prime lender in the country. How can they not cut more staff...well unless they move all the sub-prime origination into the collections and foreclosure departments.

Now, what I find interesting is that I was all about BAC buying CFC at a "discount". I remember mentioning it to my Executive VP at the time and he said. It is a good deal if Countrywide can maintain their stock price, and he continued by saying, "I doubt they can." I didn't believe him at the time. And even with today's events, I still don't believe him. But the doubts are starting to enter my mind.

And to recap all the other outstanding news of the day.

The Fed had to inject over $31 billion into the markets, the most in weeks. Not an encouraging sign.

National City also announced that they were reducing mortgage personnel by 1,300. The regional bank, the 9th largest in the US, sold their sub-prime unit to Merrill Lynch last year.

Lehman Brothers announced another 850 lay-offs following firing 1,200 people just two weeks ago. Nice.

And to top off another bad day in the mortgage market, the Mortgage Bankers Association reported that homes entering foreclosure set a record for the third straight quarter.

It's not getting better. It will get worse. No matter the bailout plan. Pain will be felt all over the markets. Be prepared.