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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: J_Locke who wrote (80382)3/26/2007 9:40:10 PM
From: Elroy Jetson  Read Replies (1) of 110194
 
That statement clearly explains Countrywide's actions.

Countrywide Bank FSB is one subsidiary of Countrywide Financial. As a Saving & Loan, only Countrywide Bank FSB will be subject to banking capital requirements. Not the parent Countrywide Financial as a Savings & Loan Holding Company.

If Countrywide Bank NA had remained a bank the parent, Countrywide Financial would have become subject to banking capital requirements as "bank holding company", in addition to their subsidiary Countrywide Bank NA.

This move allows the parent, Countrywide Financial, to run on a limited amount of capital which would not be permitted as a regulated bank. There must obviously be new stricter requirements for bank holding companies.

Its like Conseco insurance which filed for bankruptcy, yet their insurance subsidiaries, which were subject to regulatory capital requirements remained solvent.

Regulatory Capital Requirements: As a savings and loan holding company, Countrywide will not be subject to the consolidated regulatory capital requirements applicable to a bank holding company.

However, the OTS expects savings and loan holding companies to maintain capital that is sufficient to
support the holding company’s business activities, and the risks inherent in those activities. Countrywide
Bank will remain subject to capital requirements that are substantially similar to those applicable to
national banks.
.
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