However, unlike the cowboys employed during the housing boom by men like Angelo Mozilo of Countrywide Credit, Clayton lenders knew that their companies would be holding onto the loans they originated.

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And that portfolio, inherited from Countrywide Credit, may still face further loss of value should the price of residential homes continue to soften another 5% to 10%, as many experts feel could happen.

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Nothing is more dear to a finance company, especially one with a heavy hand in the subprime market, than its access to credit, something Countrywide Financial and others are finding out all too painfully.

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Most would agree paying Angelo Mozilo hundreds of millions as he was leading Countrywide to results created by easy credit and lax standards is wrong.

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The sudden announcement, and particularly Countrywide's decision to draw on its entire credit line, was considered a desperate move by the lender and fanned speculation that the company was edging toward Chapter 11.

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Thursday, all three ratings agencies cut their ratings on Countrywide's senior debt, citing severe disturbances in the credit and bond markets that have hampered the major mortgage lender's ability to raise funding for its operations.

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Bank of America's deal for Countrywide in January was certainly looked upon favorably by the Fed and other regulators, who were concerned that a liquidity-constrained Countrywide could further damage the financial markets already reeling from the credit crunch.

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But large lending institutions such as Citigroup, Merrill Lynch and Countrywide Financial took billion-dollar hits from the defaults, consequently squeezing the credit markets.

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