Country Wide Risk?

[jeffmem]

What is the risk in opening an account wtih Country Wide? I know they are FDIC approved, but it could take years to get money back should they go under. From what I gather their housing sector is ready to go belly up, but not sure how strong their banking sector is and how or if it would be affected by a crash of their housing unit.... Any ideas?

[sweeps]

I know they are FDIC approved, but it could take years to get money back should they go under.

It wouldn't take "years" to get your money back, otherwise FDIC coverage would be almost worthless.

It might take "weeks" to get your money back, but even more likely is that another bank would take over CW's deposits, so your money would be available in "days". (See the collapse of Netbank as an example.)

[m3racer]

I think putting $$ in Countrywide is foolish. They have well publicized financial problems. Why would you want to put your money there? Their higher 0.4% interest is not worth the hassle or risk.

[cewlguy2]

do not agree completely. yes they are currently in trouble but i guess they can come over this and would be able to gain back the market...matter of few months . i was actually buying their stock..still thinking..

[jeffmem]

Thanks guys,

m3racer, .4%?! What to try more like .75% difference. This is why I am considering to change...


Can someone tell me where I can find their finaical portfolio and information? I want to check their different divisions and see how each one is doing.

[humandraydel]

I'm not understanding why you keep saying you want to see how their "banking" division is doing. They are a bank. They take your deposits and lend them out. If the borrowers don't repay them, they can't give you your money back, and they go under. There is no dividing line where their mortgage unit will go under but their bank will not.

[jeffmem]

I had called them to ask about the account and also asked about the financial status.

Countrywide separates the housing/mortgage area from the banking area. They said, yes, our housing is not doing well, but our banking area is fine. I know how loans work, but the way they described it to me they are not together, they are separate... They said that their mortage is weak, but banking is strong...

[poundwise]

Who thinks Country Wide is going under? I've not heard that projected by anyone in the know. They are doing poorly right now; their stock has plummeted (of course, a lot of folks think this is good time to buy it/the argument seems to be will it rebound in the next 3 to 6 months or will it take a year or more) but, in any case, they aren't at death's door.

They are an FDIC insured institution.

The fact that they are seeking capital is a good reason to believe that they will continue to offer a top rate for online savings and CDs.

There really is no reason to avoid them.

[jeffmem]

Thanks for your thoughts poundwise. Did you invest your money with them yet?

[poundwise]

Thanks for your thoughts poundwise. Did you invest your money with them yet?

No. I don't keep much in savings at the present time as I am working diligently to pay off all of my debt. Also, I don't move my savings around very much. About two years ago, I opened an online savings account and then a second one. Some time later, about one year ago, I opened a third and closed both of the first two. Even though rates fell, and my current institution is not at the top of the list, I'm not inclined to open another account and/or move my money again.

Also, the savings rate with Country Wide is not very good unless you have and maintain a $10K balance.

If, however, I had $10K to put into a CD, you can bet I'd be considering Country Wide. At the time of this posting, they are still paying 5.50% for a 12 month CD.

Click the link in my signature to see the current rate list for savings accounts and CDs.

[Scanner]

I think part of the FDIC's commissioned mission statement is to actually provide uninterrupted money flow to depositors in the case of a banking collapse.

This recently happened with the Netbank buyout so I don't think there's hardly any risk that you couldn't get to your money. . .maybe 24-48 hours at the most, if any time at all.

PS: I think it's the lending division of Countrywide that's in dire straights. Remember. . .loans are bought and sold like commodities. The savings arm can sell it's money to whomever wants to buy it to lend it out.

[humandraydel]

Countrywide separates the housing/mortgage area from the banking area. They said, yes, our housing is not doing well, but our banking area is fine. I know how loans work, but the way they described it to me they are not together, they are separate... They said that their mortage is weak, but banking is strong...

Where does Countrywide get the money to lend? Why are they desparately raising capital (as evidenced by the HUGE advertising spree about their 5.5% CDs - they didn't have this good of rates 3 months ago)?

In the past Countrywide was making a LOT of loans, then selling the loans. The problem is their primary market has been non-conforming loans, which means they cannot sell them to Fannie Mae and must sell them to investors. However, during the credit crunch in August, investors stopped buying these loans and that left Countrywide with a LOT of loans on their books that they didn't really want. And, as I mentioned, these were non-conforming loans so they couldn't sell them to Fannie Mae, so they are stuck with them.

The problem is they were counting on selling the loans to get back their money (+ more in fees) so they could continue to lend. Since they couldn't sell them, they essentially had no more money to lend. That's why they opened a line of credit with the Fed and that's why Bank of America gave them $2 billion. It's also why they started advertising CDs with a high rate, despite the fact that the Fed cut rates.

Now, all that being said, I'm not saying any of this matters. I don't think Countrywide will go under and it doesn't matter if they did, since you are covered by FDIC.

[Hypersion]

My main bank is netbank and FDIC only froze my account for one working day. After that one day I'm still abile to do anything I want with my account; write check depot money ect. In 60-90 days it will rollover to ING.

Overall I was very impress with FDIC.

[jeffmem]

How long does FDIC take to reimburse?

Countrywide gets it's money from loans. I guess. So I am guessing they want people to save with them so they have more capital to balance off their loan issues, and if they do not go under than their banking customers will enjoy the high interest rates for quite some time. I don't know...

[InDebtInDC]

Does anybody here know how to valuate a company or are you going off of what other people say?