Fed's rate drop sparks speculation over Countrywide job cuts
New questions arise over plan to fire 12,000
By Joann Groff joann@theacorn.com

The nation's largest mortgage lender will hand up to 12,000 of its employees pink slips in the next three months in an effort to stay afloat during the home-loan crisis.

After cutting 900 jobs earlier this month and 500 in August, Countrywide Financial Corp. announced last week that up to 20 percent of its nationwide work force could be laid off.

"We are taking decisive action to ensure that Countrywide continues to be wellpositioned for further success," said Angelo Mozilo, the company's chairman and chief executive, in a statement.

The news came before the Federal Reserve Board cut interest rates by a half-percent on Tuesday, surprising financial experts who widely predicted only a quarterpoint cut. The unanimous vote to drop the rate produced the first cut in four years.

The announcement has many wondering whether the new rates will affect Countrywide's job cuts, but it's still not clear if fewer employees will be let go. Calls to the company on Tuesday were not returned.

"Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time," Fed policymakers said in a post-meeting statement.

Countrywide is headquartered in Calabasas, and has offices and banks all over the nation, including branches in Westlake Village, Thousand Oaks and Simi Valley.

In a recorded message on Countrywide's press line, a spokesperson for the lender made one thing clear: "We are not prepared to break out potential regional impacts." The recorded response was intended to address media questions about which areas would be hit the hardest by the layoffs.

The cuts had been announced in conjunction with the prediction that new mortgages will fall 25 percent in 2008 compared to this year.

"As we carry out our plan, the company's overarching focus is exactly where it has always been: to remain an industry leader in the U.S. residential lending business," Mozilo added.

Recently, the company borrowed $11.5 billion and sold a $2 billion stake to Bank of America in order to continue running its banking and mortgage lending services.

"Bank of America's investment in Countrywide represents a vote of confidence and strengthens our balance sheet, enabling us to position Countrywide for future growth and success," Mozilo said.

Countrywide's current work force exceeds 60,000.It is Simi Valley's largest private employer, providing jobs to more than 3,000 people.