By Jonathan Stempel
Reuters

Mozilo must be a real Einstein to have the guts and cojones to say there’s a recession ahead with all the mortgage foreclosures. What a freaking genius! - JS

NEW YORK (Reuters) - Countrywide Financial Corp Chief Executive Angelo Mozilo said on Thursday the U.S. housing downturn is likely to lead the country into recession, but that the largest U.S. mortgage lender will survive.

In an interview, Mozilo also said that to promote liquidity, the U.S. Federal Reserve should cut the rate it charges banks to borrow.

Countrywide faced a credit shortage this month as mortgage defaults rose and capital markets tightened. On August 16, it announced an unexpected drawdown of an entire $11.5 billion credit line because it had trouble selling short-term debt.

But on Wednesday, Bank of America Corp said it would invest $2 billion in Countrywide, buying preferred securities convertible into common stock.

This eased fears about Countrywide’s fate, which at least two analysts this month had said could include bankruptcy.

Mozilo called the investment a “vote of confidence” and a “priceless endorsement,” but said housing and the economy were not out of the woods.

Falling home prices hurt homeowners psychologically and cause them to spend less, he said. The 68-year-old executive has worked in financial services for more than a half century.

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