Countrywide Financial Cuts 12,000 Jobs
Sep 8th, 2007 @ 7:08 AM by Alden Smith
Countrywide Financial Corporation is slashing about 20% of its work force, or about 12,000 jobs. The report on Yahoo! News says that Countrywide is concerned about soaring foreclosures and defaults, and needs to slash costs. Countrywide feels that new mortgages will fall about 25% in 2008 from where it is today. Countrywide Chief Executive Angelo Mozilo stated in a letter to employees that the current market cycle is “the most severe in the contemporary history of our industry.” Mozilo also stated in the letter that “During the past two years the growth in home price appreciation has stopped dead in its tracks and in many areas of the country it has turned in the wrong direction.”
Countrywide’s Prior Attempts
Countrywide has already cut loose 900 employees earlier this week and had let 500 others go last month. They received a bailout from Bank of America in late August of 12 billion. Following on the heels of this bailout, The Fed had injected $17.25 billion into the banking system. It appears this hasn’t done the trick.
What We See
If the nation’s largest financial institution is in this kind of trouble, then the problems go deeper than a glitch in the sub-prime market. IndyMac Bancorp Inc is also cutting jobs, and has announced that it may eliminate 1,000 jobs. I find this amusing after visiting the IndyMac blog, where everything sounds like peaches and cream. Good PR can paint the bleakest picture to appear like a bed of roses.
Looking Further
It does not appear as if the struggles in the sub-prime market will go away quickly. The market has lost so much ground that a quick fix will not bail it out. The really bad thing about this is the trickle down effect it is having on the nation’s economy. Many people are losing their homes to foreclosure because of unsound banking practices. Housing sales are down. Homes are being devalued, and this further hurts the market. Builders are afraid to go ahead with new construction because of fears of not getting paid. The overall picture is much more difficult than a few woes at Countrywide.
- Posted in Mortgage Refinancing, Mortgages
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Actually many analysts predict a drop in originations as high as 40%, and layoffs as high as 20,000 if things don’t improve. And there are no signs of improvement on the horizon.
I agree. I think statistics are very conservative. There is no way to whitewash this situation.
I’m afraid this might be just the beginning. Might be more cuts coming along with the falling dollar.
Just a sign of things to come. With the falling dollar will come more job cuts
Maybe with this being an election year things will turn around in the financial markets. The banking industry has got to become more fluid for the economy to grow.
Countrywide has been in trouble for quite some time now. Not sure if the will ever get back to where they were.
Great post! I will keep bookmark. Thank you.