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E*Trade CEO: Not Worried About Bankruptcy. Won’t Sell HELOC Portfolio in Irrational Market

Jan 9, 2008 Investment Opinions, Market Outlook, U.S Hot Stocks

E*Trade CEO: Not Worried About Bankruptcy >ETFC

Last Update: 1/9/2008 4:57:32 PM

By Rupini Bergstrom
  Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–E*Trade Financial Corp. (ETFC) dispelled rumors of possible
bankruptcy that have caused its shares, along with those of Countrywide Financial
Corp. (CFC), to plummet this week.

“We’re not worried about bankruptcy,” acting Chief Executive Jarrett Lilien told
Dow Jones Newswires in an interview.

“We’re busy rebuilding the business and continue to say that any reference to
bankruptcy (at E*Trade) is irresponsible, one-sided and destructive,” he said.

In an effort to address worries that sent shares of E*Trade down about 20% on
Tuesday, following a roughly 15% decline in the previous session, the company
announced that it is exiting its institutional trading business and had sold $3
billion of mortgage-backed securities and municipal bonds at a modest loss of $5
million.

This is part of a wider plan to turn around losses at E*Trade that have stemmed
from a balance sheet considered too exposed to wobbly credit markets. Amid the
mortgage meltdown, E*Trade’s earnings and share price have taken a beating,
eventually forcing the resignation of CEO Mitch Caplan, who stepped down last
November in conjunction with the sale of $3 billion in mortgages and other
securities to Citadel Investment Group for $800 million, or about 27 cents on the
dollar.

At the time, Citadel also injected $1.75 billion into E*Trade in exchange for
10-year E*Trade notes that pay it 12.5% interest and shares, boosting its stake
to almost 20% of E*Trade’s shares outstanding - a move criticized by many as
diluting shareholder value.

-By Rupini Bergstrom, Dow Jones Newswires; 201-938-5293;
rupini.bergstrom@dowjones.com

(END) Dow Jones Newswires

January 09, 2008 16:57 ET (21:57 GMT)

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