Sunday, February 8, 2009

BofA CEO Lewis: Bank Won't Need More TARP Funds

In an interview with Maria Bartiromo from CNBC on Friday, Bank of America CEO Ken Lewis said that the bank does not need any more funds from the TARP and will look to pay back the $45 billion it has received within three years.

BofA has received some $45 million in TARP money in recent months, $20 billion of which was needed to help shield the bank from bigger-than-expected losses at Merrill Lynch. The government helped engineer the Merrill acquisition last fall as the brokerage giant neared collapse under the weight of bad mortgage-related assets.

Lewis said BofA is focused on making money and getting TARP money paid back "as soon as humanly possible."

"We're going to get on with doing business," he said. "And frankly, we had a pretty good January."

When asked about the possibility of a government takeover, Lewis said he's talked to members of Congress, regulators and government officials and that "it's not even a remote possibility and no one has mentioned nationalization."

As for the acquisition of Merrill Lynch, Lewis said he had no regrets in making it, and that "It will turn out to be a good investment over time."

Lewis said that other firms wanted to invest in Merrill and that "BofA couldn't let the deal go, and we thought it was in our best interest and in the country's best interest to go ahead with the Merrill takeover."

Lewis also says that the government promised to assist BofA in the deal and that the government strongly advised BofA not to walk away from the deal.

Lewis says BofA didn't anticipate the meltdown of Merrill assets in mid to late December, but that the company did do its "due diligence before acquiring Merrill."

As for the firing of former Merrill CEO John Thain, Lewis said, "I don't like to revisit the past; I'm sorry it happened and I wish John well."

Lewis also said he knew Merrill was considering bonuses, and the range, but was not personally involved. Merrill paid out billions in late year bonus money.

The Lewis interview came as he spent almost a million dollars this week to buy additional shares of his struggling bank. He also told employees in a memo that the bank's board last week, "unanimously endorsed our business model, strategic direction and the team," at its regular meeting on Jan. 28.

The moves are Lewis' latest effort to convince employees, investors and the board that he and his management team can lead it out of its current crisis.

Lewis purchased 200,000 shares for $958,340 on Wednesday, according to a filing with the Securities and Exchange Commission on Thursday. It's the second time in recent weeks that Lewis has pumped his own money into the Charlotte, N.C.-based bank. Two weeks ago, he bought 200,000 shares for $1.2 million.

The filing came as the Bank of America's shares rebounded from a 25-year low Thursday afternoon, following other financial stocks higher as reports surfaced that the government may modify accounting rules (mark to market) that have been blamed for contributing to banks' troubles.

Last week, Lewis went before his directors in Charlotte for "the longest board meeting in anyone's memory," he told employees in the memo issued Monday.

In the memo, Lewis called the company's performance in January "encouraging." The "extreme dislocations in the capital markets we suffered last quarter seem to have moderated."

Lead director O. Temple Sloan Jr. later issued a statement of support for the bank's management team.

Source: CNBC

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