Bank of America Corp. Chief Executive Kenneth D. Lewis said Tuesday that he wanted to start repaying $45 billion in federal bailout funds next month, after the government's "stress test" of his bank, and to give back the remainder as soon as the nation's wobbly financial system is stabilized.
In interviews at The Times, Lewis defended Bank of America's much-criticized acquisitions of Countrywide Financial Corp. and Merrill Lynch & Co. as strategically sound in the long run. And he said a cluster of financial indicators -- higher stock prices, slowing of home price declines and improvements in certain consumer delinquency gauges -- "leads me to think we're starting to see the bottom" of the recession.
With the Obama administration's stimulus efforts and the Federal Reserve's bolstering of financial markets, "the back of this beast will be broken," Lewis said. Bank of America will be ready to return its bailout funds, he said, as trust between financial institutions is restored and they resume lending to consumers and businesses.
He said he had seen nothing from the government to indicate that BofA would fail the stress test that the government will use to gauge the strength of the 19 largest U.S. banks.
When the test concludes next month, the Charlotte, N.C., bank would like to make its first payment, Lewis said.
"As soon as we think the markets normalize, we would very seriously like to pay it all back," he said. That could occur as early as the fourth quarter of this year, he added.
Only American International Group Inc., at $182.5 billion, and Citigroup Inc., at $50 billion, have received more government funds than Bank of America. The aid is not free -- Bank of America is paying Uncle Sam $2.85 billion a year in dividends -- and bank executives including Lewis have chafed at what they consider overly harsh moves in Congress to rein in compensation at banks receiving assistance.
Lewis' critics on Wall Street say his ambition for dominance in financial services led him to undermine his bank's stability by acquiring struggling Countrywide and Merrill Lynch. Some analysts and politicians suggested last month that Bank of America, which racked up a $2.4-billion loss in the fourth quarter, was so weak that it should be nationalized.
The bank's stock, which hit a low of $3.14 a share March 6, closed at $7.22 on Tuesday, down 58 cents.
Investors' hopes have been buoyed of late by comments opposing nationalization from President Obama and Federal Reserve Chairman Ben S. Bernanke, and by plans to have the government partner with private investors to buy "toxic" assets from banks.
Analyst Paul Miller of Friedman, Billings, Ramsey & Co., a frequent Lewis critic, said he expected Bank of America to struggle to keep a solid capital cushion against losses over the next 18 months, and suggested Lewis was posturing.
"Lewis has made some outrageous statements in the past, and his forecasts have not been that accurate," Miller said in an e-mail. "I think the regulators will not allow him to pay back the capital given the expected losses coming from his balance sheet."
In an interview, Lewis said the worst experience of his banking career had been digesting the acquisition of Merrill Lynch. Bank of America agreed last fall to acquire Merrill with the encouragement of the government, only to have to deal with a far-greater-than-expected $15-billion Merrill loss last quarter and outrage over huge bonuses the brokerage paid to employees before the deal went through.
Lewis said he couldn't discuss the Merrill experience in detail because of litigation.
The California Public Employees' Retirement System and the California State Teachers' Retirement System filed a joint motion Monday in federal court in New York to be designated lead plaintiffs in a class-action lawsuit alleging that Bank of America management misstated or omitted important information about Merrill's financial health to the bank's shareholders before the takeover of the brokerage.
"Just because someone says something in a lawsuit doesn't make it true," Lewis said.
Lewis, in California to visit clients, staff and media outlets, said he would cut the trip short to meet Friday with President Obama, who has summoned the chiefs of major banks to Washington for discussions.