Industry News

Countrywide denies bankruptcy rumors

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Rumors that Countrywide Financial Corp. was preparing to file for Chapter 11 bankruptcy protection sent the mortgage lender's stock price tumbling by more than 20 percent Tuesday, before trading was halted and the company issued a denial. The New York Stock Exchange briefly halted trading of the company's stock to allow Countrywide to issue a statement saying there was "no substance" to the rumor or to additional speculation that rating agencies are preparing to downgrade the company's debt. Trading was resumed after the announcement and Countrywide's stock, which closed at $7.64 Monday, bounced back above $6 after hitting a low of $5.76. Today's rumors echoed similar fears in August, when Countrywide faced a liquidity crisis and analysts at Merrill Lynch & Co. and Friedman, Billings Ramsey analyst Kenneth Bruce warned that the company could face bankruptcy if it was forced to sell off assets at fire-sale prices. Instead, Countrywide announced plans to lay off 12,00...