Bailout Time

UPDATING THE UPDATE: We're apparently all paying to bail out Countrywide:

Countrywide Financial Corp. fell more than 10 percent in New York Stock Exchange trading after U.S. Senator Charles Schumer urged the regulator of the Federal Home Loan Bank system to probe cash advances to the largest U.S. mortgage lender.

Schumer said he was alarmed by the volume of advances the system's Atlanta bank has made to Countrywide considering "the rapid deterioration'' in the credit quality of some of the Calabasas, California-based company's mortgages. Schumer expressed his concerns in a letter sent today to Federal Housing Finance Board Chairman Ronald Rosenfeld.

The Atlanta bank has made $51.1 billion in advances to Countrywide as of Sept. 30, representing 37 percent of the bank's total outstanding advances, Schumer wrote, citing U.S. Securities and Exchange Commission filings.

No respectable company would assume 37% of Countrywide's debt. The Federal Loan Home Bank system, however, isn't a company at all. It's as close as you can get to a federal bailout.

The Federal Home Loan Bank is what the British call a quango — a quasi-non-governmental organization. Although it isn’t legally backed by taxpayer money, it’s widely perceived as having an implicit federal guarantee. And at first glance, it appears that taxpayers’ trust is being used to bail out one of the biggest bad actors in the subprime story.

More here.