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With buzz ramping up on the rumor Bank of America (BAC) may be acquiring Countrywide Financial (CFC), the deal has to be explored from a risk/reward standpoint.

Bank of America of course already infused Countrywide with $2 billion back in August, as the company needed cash after the loan defaults continued to mount, which created problems for it to receive debt financing. Bank of America still has the right of first refusal if the company is sold.

A couple things to consider if the deal goes through, is the market value of Countrywide has plunged to the point to make it an affordable asset. That in itself lowers the risk.

More importantly, it offers even larger potential for gains if the company can be turned around, and those gains wouldn't be insignificant.

As Kathleen Shanley, an analyst at Gimme Credit said, "The potential payoff if things improve is very big for Bank of America. Countrywide is the largest mortgage franchise in the country, and it's a huge servicer. But we don't know how long the mortgage downturn will last and how bad the mortgage losses will ultimately be."

Here's the problem with the deal, as Shanley mentions above, is the depth of the problems aren't able to be measured at this time. That, along with the unknown of how long the downturn will last, makes it difficult to make a decision.

Even so, Bank of America should understand the risk ratio, and obviously knows its own financial condition.

One obvious problem is the outcome; not only financially but concerning their reputation. If the economy rebounds in a timely manner, and the foreclosures don't go too deeply, they'll look like geniuses. On the other hand, if everything is the opposite of that, everybody will start wondering why they did it in the first place. It could also be a big drag on the company for a long time if things are worse than expected or known.

The news that late payments and foreclosures broke records in December for Countrywide isn't a real comforting thought either.

I see this as a 50/50 decision for Bank of America. The possible rewards are extraordinary, but so are the potential problems associated with Countrywide. I wouldn't say it's like rolling the dice, but there's a lot of uncertainty that can't be known until events unfold. That's what the decision Bank of American must make is based upon.

To me, it comes down to getting the right price. With that, I think it's the right time to invest if they're going to do it. On Countrywide's side, they're in big trouble if someone doesn't acquire them. You can't run a financial institution without liquidity, and with Countrywide it's in short supply.

With the potential for bankruptcy for Countrywide being very real, even though they've been denying it, it will make some type of deal immenent for them, if someone's willing to take on the risk.

In the end, I would be surprised a little if Bank of America doesn't make the move. Over the long term is has the potential to be a great opportunity and value to shareholders. I think the rewards in this case slightly outweight the risks. The timing is right to get the best price they can, which tilts the deal into positive territory in my view.