The news this morning that Countrywide has borrowed about $11 billion from 40 banks is enough to give anyone pause.

While that sounds like a lot of cash, it will only fund about 36,000 $300,000 loans. Countrywide then has to turn around and resell those loans on the secondary mortgage market. Which ordinarily wouldn’t be hard to do at all. But Fannie Mae and Freddie Mac may not have enough room to buy all of those loans, so Countrywide would have to turn to the larger secondary market — except that no one there is buying U.S. home loans at the moment. (Or at least, not in droves.)

Which is how a liquidity crisis gets a little scary.

Countrywide has between 6 to 7 million loans in its portfolio. They probably need to do at least 1 million loans a year to keep that number where it is, or grow it slightly. Approving 1 million purchase and refinance loans per year means completing 83,000 transactions per month.

Go back to the top: $11 billion will cover maybe 36,000 loans. Even if Countrywide only does 41,500 loans each month, there could be a of 7,500 loans that won’t get funded. Oh, and then there are the 60,000+ employees who will be looking for their next paycheck in 2 weeks.

Aug. 16, 2007.