to a nearly $50 billion funding cushion. After the collapse of American Home Mortgage on August 6, 2007, attention returned to Countrywide Financial which at the time had issued about 17% of all mortgages in the United States. Only days later, Countrywide Financial disclosed to the U.S. Securities and Exchange Commission (SEC) that these disruptions in the secondary mortgage markets could hurt it financially: Since the company is highly dependent on the availability of credit to finance its operations, disruptions in the debt markets or a reduction in our credit ratings could have an adverse impact on our earnings and financial condition, particularly in the short term… Current conditions in the debt markets include reduced liquidity and increased credit risk premiums for certain market participants. These conditions, which increase the cost and reduce the availability of debt, may continue or worsen in the future…. There can be no assurance, however, that the Company will be successful in these efforts, that such facilities will be adequate or that the cost of debt will allow us to operate at profitable levels. This raised speculation that Countrywide was a potential bankruptcy risk. On August 10, a run on the bank began as the secondary mortgage market shut down, curtailing new mortgage funding. The perceived risk of Countrywide bonds rose. Fitch, Moody's and Standard & Poor's credit ratings agencies downgraded Countrywide 1 or 2 grades, some to near junk status. The cost of insuring its bonds rose 22% overnight. This also limited its access to commercial paper. Some institutional investors admitted trying to sell Countrywide paper. Fifty other mortgage lenders had already filed for Chapter 11 bankruptcy, and Countrywide Financial was cited as a possible bankruptcy risk by Merrill Lynch and others on August 15. This combined with news that its ability to issue new commercial paper might be severely hampered put severe pressure on the stock. Its shares fell $3.17 to $21.29, which was its biggest fall in a single day since the crash of 1987 – the shares had fallen 50% so far that year. On August 15, 2007, Merrill Lynch advised its clients to sell their stock in Countrywide. Announcement of problems and bailouts On Thursday, August 16, 2007, the company expressed concerns over liquidity because of the decline of the secondary market for securitized mortgage obligations. Countrywide also announced its intent to draw on the entire $11.5 billion credit line