Shares in embattled lender Countrywide Financial Corp. gained ground early Tuesday after the company said that big losses at Freddie Mac are unlikely to significantly dent its lending business.
The Calabasas-based lender doesn't believe the loss at Freddie will have a "material impact on its ability to fund loans," company spokesman David Bigelow said at an investor conference. He also added that Countrywide is strong enough to withstand the current housing slump and credit crunch.
Last week, Freddie Mac, which is a crucial source of funding for mortgage lenders like Countrywide, reported a $2 billion loss, making investors nervous that it may not buy many loans from Countrywide and other lenders. Shares in Countrywide have plunged nearly 80 percent this year and rumors of impending bankruptcy have constantly circled the company.
Complicating matters, Sen. Charles Schumer (D-N.Y.), pressed regulators Monday to look into a rise in Countrywide's borrowing from certain regional banks in the Federal Home Loan Bank system because of potential risks to the system.
"We are very familiar with FHLB collateral requirements and we are in full compliance with them," Bigelow added, pointing out that Countrywide has "adequate liquidity to fund growth and operating needs."
Shares in Countrywide gained 3.7 percent to $8.95 in early trading Tuesday on the New York Stock Exchange.
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