These include bad loans which will need to be written off and big legal liabilities. For instance, 7.2% of the loans in Countrywide's servicing portfolio were delinquent last month, up from 4.6% in December 2006. Foreclosures also more than doubled last month, to 1.44% of unpaid principal balances versus 0.70% in December 2006.

And Countrywide is in the middle of some significant lawsuits. The Wall Street Journal reports that Countrywide is facing borrower suits and investigations by federal and state agencies for alleged lending and loan-servicing abuses, as well as shareholder suits stemming from its financial decline. I have no estimate of how much it will cost to settle these suits.

I don't know how this will play out. The answer depends on how big the write-downs will be for Bank of America, how much it has to pay to settle lawsuits, and how long it takes for the housing and mortgage markets to recover. I think that Bank of America is betting that the eventual recovery of that mortgage industry will leave it in a dominant position whose economic value will more than offset its $6 billion+ bet on Countrywide.

In pre-market, Countrywide investors are heavily disappointed with the deal -- valuing it at $6.72, 13.3% below yesterday's close and 6% below the deal value. Bank of America shares are down 25 cents in pre-market.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.