If mortgage defaults represent a small portion of Countrywide’s loans, why is Wall Street so worried?
“In a worst-case scenario, which most analysts see as unlikely, banks, depositors, investors and federal agencies would refuse to keep lending Countrywide the money it needs to pay for all the mortgage loans and securities it holds. In such a scenario, the company would be forced to sell those loans at fire-sale prices, weighing on markets and incurring losses both for itself and its lenders. Countrywide borrows from a broad and diverse group of creditors, so the related losses would likely be widespread.
