16 August 2007: Countrywide taps its entire $11.5 billion credit line
Countrywide Financial, the largest US mortgage lender, drew down its entire $11.5 billion bank credit line as funding markets for mortgages froze. Its shares plunged and customers worried about their deposits. Days later Bank of America invested $2 billion, and early the next year agreed to buy the company. The deal would later cost Bank of America many billions in legal and mortgage losses. The housing bust had found its first giant casualty.
The lesson: A lender that cannot fund itself is in trouble, no matter how profitable it looked last year.
What it meant for investors
$1,000 in Countrywide at the start of 2007 → $95.24 today, vs $4,789 in the S&P 500.
We start the clock at the start of 2007, the year it happened. That is a loss of $905, while a plain index fund over the same years made $3,789.
What Countrywide teaches: Rapid growth in lending often means loosening standards; in finance, the fastest growers in a boom are frequently the first casualties in the bust.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2007 | $42.00 | $95.24 | $4,789 |
| 2008 | $9.00 | $444 | $4,626 |
| 2010 | $4.00 | $1,000 | $6,071 |
green = beat the S&P 500 · red = lost money
What if you bought Countrywide? Every starting year and the full story →
More Countrywide history
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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