2nd Update: Countrywide shares below $6

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Second update: Countrywide shares sold off in huge volume today, closing at $5.47. (Aside: How do you think Bank of America feels about that $2-billion investment at $18/share?) Kathy Kristof of the L.A.Times wraps up today’s drama here.

For those of you tuning in late, today’s Countrywide drama actually began last night when the New York Times posted this: ‘The Countrywide Financial Corporation fabricated documents related to the bankruptcy case of a Pennsylvania homeowner, court records show, raising new questions about the business practices of the giant mortgage lender at the center of the sub-prime mess.’

E-mailer BJ observed, ‘I have to admire the ingenuity…it’s on the level of ‘the dog ate my homework,’ ... Have a great day! I am off to recreate the cancelled checks for some bills I paid – really!’

Today’s bigger story was a dramatic selloff of Countrywide shares on bankruptcy rumors: Reuters earlier quoted a Chicago trader: ‘There is renewed speculation that Countrywide will declare bankruptcy or have some default action,’ said Al Greenberg, head floor trader at broker-dealer BNY ConvergEx Group in Chicago.

Countrywide issued this statement today: ‘There is no substance to the rumor that Countrywide is planning to file for bankruptcy, and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the Company.’

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Photo Credit: Bloomberg