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The screenshot above is from Countrywide's Web site, taken a few minutes ago.  Without context, it seems like a regular advertisement.  Get a 12-month CD issued by Countrywide and backed by FDIC.  Earn 5.65 percent.  Sounds like a good deal.

But, out of context, the ad does us no good. 

In context, let's look Countrywide's offering versus what other banks are presenting for the same FDIC-insured, 12-month Certificate of Deposit.

The chart at right is from Fidelity's Web site.  It shows that eight banks are offering anywhere between 5.000% and 5.150% for the same product.

As Professor Woolridge asked: "What can we infer from the data?"

I hate to answer a question with a question (and especially with a rhetorical question), but what does it say when Countrywide offers a CD yield a half-percent higher than everyone else? 

And then brags about it!

To me, it says that Countrywide is desperate to borrow funds from as many channels as possible and that the company's problems may be deeper than believed.

The company stock is off 42% in the last month, it's tapped an $11.5 billion line of credit recently, and layoff notices began circulating Friday.

And then the story takes an interesting twist when we consider that its CDs are priced so far out of the market. 

Remember: Certificates of Deposit offer an interesting debt opportunity to Countrywide because each "deposit" is FDIC-insured for up to $100,000. 

In other words, even if Countrywide defaults on its CDs, the holders of the CDs stand to lose nothing except the opportunity cost of giving their dollars to the Calabasas-based lender.  The FDIC (i.e. U.S. taxpayers) will replace their "lost" principal balance.

This is a clear case of Moral Hazard if I've ever heard one.  By paying a half-percent more than every other bank on Fidelity's Web site, Countrywide appears to be taking on risk for which they won't be responsible if the company fails.

And this is what Professor Woolridge told us.  Sometimes the bank with the highest yield is the bank with the biggest troubles.

In Countrywide's case, he may have been right again.

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Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.