CFC - just another $12 billion to tide us over

So that brings the grand total to $25.5 billion in extra funding that CFC has secured in the last 4 weeks. There was the existing credit facility of $11.5 billion, then the paltry $2 billion from BAC and now another $12 billion.

No doubt CFC has now been banished from the exclusive club of commercial paper issuers and has had to look elsewhere for funding. Will this be enough? Who knows but things must be tough.

In Another sign of the times CFC announced that August mortgage loan fundings fell 17% from a year earlier with average daily applications dropping 12% to $2.3 billion. However the following was the most interesting of CFC's recent revelations:

While Countrywide's residential lending business is retrenching - also seen by its plan to cut up to 12,000 jobs, or 20% of its work force - the firm's commercial segment isn't. The company said commercial real estate funding volume nearly tripled in August from a year earlier to $757 million.

Banking on the continued strength of the Commercial Real estate market is a risky prospect given that it usually follows the residential real estate market. Why would a market that has been fueled by easy credit and an absence of risk considerations be immune to a repricing of risk and tighter credit? The short answer is, it wont be.