In the 1946 holiday classic It's A Wonderful Life, George Bailey, the owner of a small savings & loan that provides mortgages to upward moving lower and lower middle class families, sees his business saved by those who know him best. Bailey's good reputation outweighs the lending chaos created by Mr. Potter, the misanthropic owner of a large bank, who is attempting to put his only competitor out of business.

Yesterday's $11.5 billion loan package provided by a syndicate of banks is not too dissimilar to that great holiday tale. For those who have been around the block a few times, Countrywide's CEO and founder, Angelo Mozilo, is one of the great US businessmen of the last thirty years and has an outstanding reputation as a business operator and person.

In the mortgage business, you have Fannie Mae (NYSE: FNM), Freddie Mac (NYSE: FRE) and then Countrywide Financial Corporation (NYSE: CFC). If Countrywide is unable to participate in the market, and with most mortgage trading desks at the large brokerage firms a mess, that would mean the mortgage market will be left to the two GSOs, potentially creating a massive Mr. Potter.

Yesterday's loan to Countrywide was the result of good businessmen and good lenders working together in a very difficult market. It is not too different than the Goldman Sachs Alpha Fund recap of last week where investors were willing to put up more capital to profit from recent short-term market dislocations rather then dump their investment and running for the hills.

At the end of the day, the U.S. capitalist system does help good businesses with good people, which creates America's inherit optimism. Although we will never know, as part of the Fed's decision to lower the discount rate this morning, could have been a Fed official saying "if Countrywide and Mr. Mozilo are in trouble, we better start changing policy." That is how highly regarded Mr. Mozilo is, which is something very important that was missed in Merrill's research report.

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Peter Cohan: Is Bank of America's (BAC) purchase of Countrywide Financial (CFC) a good bet?
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