The loss in the current quarter was primarily driven by a significant addition to loan loss reserves in anticipation of higher future charge-offs. As a result, the provision for credit losses in the third quarter was $784 million, compared to $246 million in the prior sequential quarter and $28 million in the prior year quarter. During the third quarter of 2007, net charge-offs in banking operations were $126 million, which compares to $109 million in the second quarter of 2007 and $6 million in the third quarter of 2006. The allowance for credit losses at September 30, 2007 grew to $1.1 billion from $469 million at June 30, 2007.

Countrywide said that net consumer accounts rose by 9%.

During the quarter, disruption in the capital markets caused a severe lack of liquidity for non-agency loans and mortgage-backed securities which resulted in losses on the sale or write-downs of such loans and securities that aggregated to approximately $1.0 billion. Approximately $12 billion of non- agency loans were moved to the Company''s held-for-investment portfolio after their write-down.

Loan loss provision was increased in this investment portfolio to $934 million from $38 million a year ago and $293 million at the end of the second quarter. The company also incurred impairment to the loans held by $690 million, higher than $417 million in the second quarter and $27 million a year ago. The provisions for loans warranties and representations were increased to $291 million from $41 million a year ago.

During the third quarter Countrywide announced a plan to reduce headcount by 10,000 to 12,000 people before the end of 2007 in response to the expected decline in volume.

The charge taken in the third quarter of 2007 related to the Company''s restructuring efforts was $57 million. Approximately $70 million to $90 million of additional restructuring charges will be recorded, primarily in the fourth quarter of 2007.

Countrywide sounded a positive note in the press release for the rest of the 2007 and 2008. The release said, “Despite these expectations of continued industry challenges, management expects the Company to be profitable in the fourth quarter of 2007 and in 2008. Countrywide''s consolidated earnings are expected to range between $0.25 and $0.75 per diluted share for the fourth quarter of 2007.”


6:00AM New York, 7:00PM Tokyo – Investors returned for financial stocks. Earnings from Sony and Honda lead Tokyo up 1.36%. Consumer prices fell 0.2% in September from a year ago and industrial production declined 1.4% in the month.

Japan stock index rallied on better than expected earnings from Honda Motor Corp and Sony Corporation. Financial stocks also recovered as investors focused on domestic earnings in the sector.

In Tokyo trading Nikkei 225 firmed 1.36% or 221.46 to 16, 505.63, while the broader Topix Index edged up 1.7% or 25.90 to 1,573.98.

Of the Nikkei 225 stocks 141 gained, 72 declined, and 12 were unchanged. Honda Motor Corp led the gainers in the index rising 8.89% after reporting three months earnings profit to September jumped 63% to 208.5 billion yen.

Energy stocks climbed as oil topped $92 per barrel on growing battle between Kurdish rebels in northern Iraq and Turkish military and declining U.S. petroleum inventories. Inpex rose 3.25% to 1.27 million yen, Mitsubishi Corp firmed 4% to 3,640 yen, Mitsui & Company gained 5.6% to 3,030, and Nippon Oil Corp gained 1.59%.

In the first section of the Tokyo Stock Exchange 6.8 billion shares worth 1 trillion yen were traded and 145 million shares valued at 3.2 billion yen were traded.

The Ministry of Internal Affairs and Communication’s Statistics Bureau reported today that core consumer price index was unchanged in September from August but down 0.1% from a year ago. The Bank of Japan is meeting on October 31st to decide interest rate direction.

Statistics from the Ku-area in Tokyo, a key gauge of nationwide prices, revealed that food prices were up 0.2% for the month and 0.1% for the year, while fuel, light and water charges were unchanged for the month but firmed 0.2% over the previous year. Clothes and footwear prices gained 6.4% in September and 0.6 over last year. Reading and recreation fell 1.3% for the month and 1.2% for the year. Services plunged 0.4% from August, but rose 0.2% from last year.

However, for the month of October food prices fell 0.1% but rose 0.5% for the year. Housing remained unchanged from August and increased 0.2% for the year. Fuel, light and water were up 0.8% for the month and 1.2% from the previous year. Clothes and footwear gained 1.2% from August but tumbled 1.7% over the previous period last year. Service prices for October remained unchanged, while firming 0.3 over the corresponding period last year.

The Ministry of Economy, Trade and Industry said today industrial production fell 1.4% in September for the first time in two months, on a sharp rise of 3.5% in August when automakers resumed production after July 0.4% decline due to an earthquake. However, September production was up 0.8% from a year ago.

Seasonally adjusted production index decreased to 110.3, shipment index declined 1.9% to 114.5, and inventory index increased 1.0% to 97.0.

According to METI, industries such as general machinery, transport equipment, information and telecommunications electronic equipment in that order where the main contributors to the decline.

Shipments fell 1.9% in September, but climbed 2.1% for the year, and inventory increased 1% from previous month. However, the survey of production forecast in manufacturing showed production is expected to increase 3.8% in October and 0.7% in November.