Does the B in BofA mean Bull?
Bank of America Corp. (BAC) Chief Executive Kenneth Lewis could probably convince Eskimos to borrow money to buy ice. The loquacious Lewis has been trying mightily to convince investors that he has not bitten off more than he can chew through the acquisition binge that put a dent in his banking empire.
Way back in 2007, Lewis snapped up LaSalle Bank Corp. from ABN AMRO Holding NV for $21 billion. Several months later, BofA gobbled up Countrywide Financial Corp., the troubled mortgage lender, for $4.1 billion. But the granddaddy of them all was the $50 billion purchase -- at the government's urging -- of Merrill Lynch.
Shares of BofA have declined so badly since the Merrill purchase that a coalition of pensions is seeking to oust Lewis. The smooth-talking banker, who has had to fire thousands of workers to integrate his acquisitions, is rejecting this criticism. Investors who have pushed BofA shares up recently, along with other financial stocks, seem to back him, at least for now.
"I have to look out over a longer horizon than say the last three or four months," he told the Charlotte Observer. "If I look out over an intermediate timeframe such as the next three to five years, or a longer timeframe of five to 10 years, I think Merrill will prove to be one of the best acquisitions we've ever made."
Best acquisition we've ever made? I guess that depends on whether all of the bad stuff has been found at Merrill already. Moreover, Lewis is still facing the embarrassing revelations about bonuses paid to Merrill executives before the deal closed. He probably is thankful that negative attention is being diverted from his company by American International Group Inc. (AIG).
In the interview, Lewis also reiterated his statements about "mistakes" he made in accepting money from the Troubled Asset Relief Program. He argued that accepting $45 billion in TARP money made BofA appear as weak as Citigroup Inc. (C).
First, he promised BofA would pay back the government in two to three years. Lewis now expects to pay the money back by late this year or early next year, depending on the economy, the Observer said.
For now, he is not worried about keeping his job.
"I have not given it one single moment of thought.... I have been at this company almost 40 years, and it has been my life for two-thirds of my existence, and what I want to do is see us get through this and then start to realize our full potential and make $30 billion after tax, which is what we should make in a good time," he told the paper.