Shares in local lenders advanced early Tuesday after the Federal Reserve moved to help a rickety lending market by making up to $200 billion available to cash-strapped financial institutions.
Shares in Pasadena-based IndyMac Bancorp Inc. surged 13 percent to $5.30 while Calabasas-based Countrywide Financial Corp. added 13 percent as well to $4.91. Shares in Santa Monica-based real estate investment trust Anworth Mortgage Asset Corp. gained 6 percent to $5.88.
Under the Term Securities Lending Facility, the Fed will use an auction system starting at the end of March to provide big investment firms that trade directly with the Fed with short-term loans of ultra-safe treasury securities. The move in essence injects liquidity into the markets.
The move by the Fed also comes the same day IndyMac said in a regulatory filing with the Securities and Exchange Commission that borrowing costs have increased "due to panic market conditions," and that "most of any potential negative financial impact in the first quarter of 2008 is not warranted" by the underlying performance of its assets.
IndyMac added that none of its AAA-rated, mortgage-backed securities that are not eligible for purchase by Fannie Mae or Freddie Mac have been downgraded and that it has enough funding through deposits, long-term debt and equity to be able to continue to hold these securities.
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