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BofA chief: No plan for government to take over

February 07, 2009|Associated Press

CHARLOTTE, N.C. — Bank of America Corp. Chief Executive Ken Lewis capped off a week of defending his bank and his role in it on Friday by firing back against rumors that his company could be in danger of nationalization.

"It's absurd," Lewis said in an interview on CNBC, adding that he knew of no government officials who had talked about nationalizing the bank.

Treasury Secretary Timothy Geithner and other top officials are close to finishing a plan to overhaul the government's $700-billion financial rescue fund. Some investors in recent days have been worried that the government's latest revisions to its lifeline for banks would involve nationalizing banks.

Speaking generally about the banking industry, Lewis emphasized the strength of his company, saying that BofA would not need additional federal funding and still believed its acquisition of brokerage Merrill Lynch & Co. was the right move.

"It's been painful. . . . I am still as convinced as ever that strategically this makes sense," Lewis said in the CNBC interview.

The interview was Lewis' latest effort to convince employees and investors that he and his management team can lead the bank out of its current crisis.

Earlier in the week Lewis spent almost $1 million buying shares of his struggling bank and posted a memo to employees that said the bank's board "unanimously endorsed our business model, strategic direction and the team" at its regular meeting on Jan. 28.

Bank of America shares rose $1.29, or 26.7%, to close at $6.13 on Friday, after falling to a 25-year low of $3.77 in trading Thursday morning.

"Investors believe that this bank is about to fail and be nationalized by the United States government," wrote Ladenburg Thalmann analyst Richard Bove in a research note late Thursday.

He added that those fears "make no sense whatsoever," and he rates Bank of America's shares a "strong buy."

Lewis bought 200,000 Bank of America shares for $958,340 on Wednesday, according to a filing with the Securities and Exchange Commission.

It was the second time in recent weeks that Lewis has pumped his own money into the bank. Two weeks ago, he purchased 200,000 shares for $1.2 million.

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