Countrywide Financial Corp. (CFC.N: Quote, Profile, Research) Chief Executive Angelo Mozilo said on Tuesday the U.S. mortgage sector is entering a "liquidity crisis," but that investors and speculators are overreacting by punishing healthier lenders as well as marginal ones.
"This is now becoming a liquidity crisis," and "it's going to get uglier," Mozilo said on CNBC television.
Mozilo said the winnowing out will be "great" for Countrywide, the largest U.S. mortgage lender, which might pick up market share.
He said investors and speculators, who have punished shares of many companies with mortgage exposure, have engaged in an "overreaction, a baby out with the bathwater." Still, he said the housing slowdown means "the economy will be impacted negatively, and the (Federal Reserve) will move interest rates down."
Today we've had the second largest subprime lender delisted, another entering a period of problems and the largest subprime lender say mortgages are in a liquidity crisis.
I think all of this qualifies as a bad news day.