Countrywide Rallies on Rate Cut; Worried Depositors Pull Out Cash

Countrywide jumped on news earlier today that the Federal Reserve had cut the discount rate by 50 basis points – the company was up nearly 11 pecent to $21.00 per share as of when this post was published. In spite of the jump, clear signs of uneasiness exist. The LA Times reported that numerous customers rushed the bank yesterday to pull out large sums of deposited funds — including even the president of troubled lender Impac Mortgage Holdings:

Bill Ashmore drove his Porsche Cayenne to Countrywide’s Laguna Niguel office and waited half an hour to cash out $500,000, which he then wired to an account at Bank of America. “It’s because of the fear of the bankruptcy,” said Ashmore, president of Irvine’s Impac Mortgage Holdings, which escaped bankruptcy itself recently by shutting down virtually all its lending and laying off hundreds of employees. “It’s got my wife totally freaked out,” he said. “I just don’t want to deal with it. I don’t care about losing 90 days’ interest, I don’t care if it’s FDIC-insured — I just want it out.”

No word yet on whether Ashmore’s comments apply to his own mortgage operation. Update: Banc of America Securities upgraded Countrywide to “neutral” from “sell,” although the price target dropped to $21 from $31.

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