Bank chief rethinks $20b aid request
NEW YORK - Bank of America's chief executive is now calling his request for $20 billion in government money to support the acquisition of Merrill Lynch a "tactical mistake," according to a news report.
Ken Lewis also said he would stay on as chief executive until the bank pays back all of its $45 billion in government funding - which could take two or three years, the Financial Times reported yesterday.
Bank of America spokesmen did not immediately return calls for comment.
The news came as Bank of America's shares plunged alongside other bank stocks.
Lewis told the Financial Times that taking $20 billion from the government in January made Bank of America Corp. appear as weak as Citigroup Inc. He took it because he wanted "a cushion" of capital as his company absorbed the ailing investment bank Merrill Lynch, but he should have requested $10 billion instead, Lewis said.
Bank of America and Citigroup have each gotten $45 billion in government funding, and both reported losses in the fourth quarter. But Bank of America's $2.39 billion loss was its first quarterly shortfall since the crisis began. Citigroup, on the other hand, has reported five straight quarters of losses adding up to more than $28 billion.
Citigroup also got a large portion of its government investment converted to common stock last week.
Citi and Bank of America are among the 20 banks that the government will "stress test" to decide if they have sufficient capital to survive sharply deteriorating economic conditions.
In addition to its uncertain financial health, Bank of America has come under scrutiny after Merrill Lynch executives received $3.6 billion in year-end bonuses.