A bankruptcy filing by Countrywide Financial Corp., Calabasas, Calif., would cause a "psychological impact to the world financial markets [that] would be significant," says National Association of Mortgage Brokers legislative chairman Joe Falk.Speaking at a news conference held by the California Association of Mortgage Brokers at its annual convention in Long Beach, Calif., Mr. Falk maintained that, given Countrywide's market share, there would be a short-term disruption to the marketplace until others picked up the slack. (The issue arose after a Merrill Lynch analyst told clients that if enough financial pressure were placed on Countrywide, it might file for bankruptcy protection.) Ed Smith, the CAMB's vice president of government affairs, added that the failure of any company, not just Countrywide, would put more homeowners in peril and take away their options. CAMB past president John Marcell noted that Countrywide's correspondent channel is the secondary-market outlet for a large number of small and midsize mortgage banks, arguing that if that channel went away it could have a domino effect.

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