Schumer after Countrywide

This time, NY Sen. Chuck Schumer wants to look at the potential risks of having the Federal Home Loan Bank of Atlanta lend billions of dollars to Calabasas-based Countrywide. In case you're a little hazy, there are 12 home loan banks - all privately owned but chartered by Congress. The banks finance their investments mostly by issuing bonds. The home-loan bank money has replaced lots of the funding that dried up in August when investors began freaking out over the increased numbers of defaults. Schumer wants a review of how the Atlanta bank evaluated the collateral being used by Countrywide. Why Atlanta? The mortgage lender owns a savings bank based in Alexandria, Va., which is part of the Atlanta bank's territory. Here's more from the WSJ, which today reported on all the Countrywide borrowing.

Richard Dorfman, the Atlanta home loan bank's chief executive, said his institution has remained prudent in its lending even as its loans to Countrywide have surged. By funneling money to Countrywide and other mortgage lenders when the credit markets froze up, "we were able to provide exactly the service we were designed to do," said Mr. Dorfman, who became chief executive of the Atlanta bank in June after serving as a senior executive at ABN Amro Inc. and Lehman Brothers Inc. "We did it hugely," he said in an interview. "We did it safely." Countrywide's borrowings from the Atlanta bank are mostly secured by mortgages -- an asset many investors are shunning as defaults soar.