Countrywide CEO urges cut in discount rate

NEW YORK (Reuters) - Countrywide Financial Corp CFC.N Chief Executive Angelo Mozilo on Thursday said the U.S. Federal Reserve should cut the discount rate to a level equal to the federal funds rate to boost liquidity.

"If you really want to create liquidity, then you should bring the discount window down to the Fed funds rate, so they (banks) can use it without paying more than they would to other banks," Mozilo said in an interview, adding: "A statement by the (Bush) Administration and (Fed Chairman Ben Bernanke) that they are concerned about housing, are paying attention, and won't let it get out of control, has a psychological impact."

Mozilo said he can see the U.S. economy slowing down enough to concern banking regulators about what will happen next. He also called for a temporary lifting of portfolio caps on mortgage companies Fannie Mae FNM.N and Freddie Mac FRE.N, saying "at the very time they're desperately needed to create liquidity for first-time homebuyers, their balance sheet has been capped."

Mozilo also said Countrywide can stay independent. "We've gone it alone for 40 years and can go it alone for another 40 years," he said.

(Reporting by Jonathan Stempel)