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[DeaconBenjamin]

``Effective insolvency'' would result if creditors force Countrywide to sell assets at depressed prices or investors lose confidence in its ability to raise cash, Kenneth Bruce, a Merrill analyst in San Francisco, said in a research note today.

Shareholders shouldn't ``understate the importance of liquidity,'' Bruce wrote. ``If liquidations occur in a weak market, then it is possible for CFC to go bankrupt,'' said Bruce, who downgraded Countrywide to ``sell'' from ``buy.'' The Calabasas, California-based company trades under the ticker CFC.