The FHLB extended credit at 82 cents on the dollar for Countrywide's worst loans, the loans it couldn't sell for anywhere close to 82 cents on the dollar. When Countrywide collapses, as I expect it will, the taxpayers will be on the hook for billions in losses. Extraordinarily rare kudos to the sleazy Senator from New York for doing the right thing. Then again, Countrywide is notably absent from Chucky's contributor list.
According to the most recent SEC filings, FHLB Atlanta had made $51.1 billion in advances to Countrywide Bank, representing 37 percent of the Bank's total outstanding advances as of September 30, 2007 and far exceeding advances made to the next largest borrower. Countrywide had pledged $62.4 billion of mortgages as collateral for the FHLB advances, representing 78 percent of its total mortgage loans held for investment at the bank.
I find these numbers alarming as reports continue to emerge about how Countrywide's reckless and predatory lending practices were a leading contributor to today's foreclosure crisis. Moreover, it is my understanding that Countrywide's loans held for investment at the bank have been far from immune from the credit deterioration that has resulted from unsound lending.
Even a blind squirrel
Senator Chucky Schumer, firmly in the pocket and on the payroll of Wall Street and the big banks, inexplicably takes the right side of an issue, challenging the Federal Home Loan Bank of Atlanta's massive taxpayer-funded bailout of Countrywide:
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