Bank of America CEO Ken Lewis says the bank made screwed up in asking the government for $20 billion to support its purchase of Merrill Lynch.
The problem is that the request made Bank of America appear as weak as beleaguered Citigroup, Lewis tells the Financial Times.
He also says he will remain at the helm of his bank until it repays the $45 billion of assistance it has received from the Treasury Department.
That could be two to three years, he says.
Lewis laments the “abundance of caution” that led him to take more aid than he said was necessary to absorb Merrill’s $15 billion fourth-quarter loss.
The bank first garnered $25 billion from the Treasury in September. It asked for $20 billion more at year-end, as Merrill’s losses surpassed Bank of America’s expectations.
“In hindsight, it was a tactical mistake, because it put us in the same category as Citigroup,” Lewis says.
“We could still have had 8 percent tier 1 capital after a $15 billion loss, but we wanted a cushion.”
In retrospect, the bank should have just requested $10 billion for that purpose, Lewis says. That amount would have curbed investor concern that further problems were coming.
Bank analyst Richard Bove rated Lewis’s bank a strong buy last month, thanks to cash flow and government aid.
“I have always believed Ken Lewis may be the best operating manager of any bank in the U.S.,” Bove wrote in a report.
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