Bank of America Chief Executive Ken Lewis defended his takeover of Countrywide Financial Corp., saying Wednesday that the Calabasas lender “kind of went into a shell and didn’t say much about what they were doing right” when the mortgage business hit the skids last year.
But Bank of America still plans to dump the Countrywide name early next year in favor of the Bank of America brand, Lewis confirmed.
Often cast as having epitomized the lax lending standards that buried millions of Americans in unaffordable loans, Countrywide, the nation’s largest mortgage lender, was on the ropes when Bank of America agreed to buy it six months ago.
But in an interview with Los Angeles Times reporters and editors, Lewis said Countrywide had been painted with too broad a brush, and he promised to do a better job of defending it than its co-founder and chief executive, Angelo R. Mozilo, had done.
“There’s always another side to any story, and we’re going to tell it,” Lewis said, praising Countrywide’s efforts to avert foreclosures, which he credited for helping almost 100,000 borrowers remain in their homes this year.
“We don’t think in every instance that Countrywide was the bad guy,” Lewis said.
On a weeklong California trip that included a Town Hall Los Angeles luncheon address Wednesday, Lewis acknowledged that loan losses at Countrywide were at the high end of estimates that Bank of America projected in January.
But he said Bank of America paid so little for the lender that once the books on the deal were closed, the Countrywide operation would immediately show a profit -- with the potential for huge growth in income when the mortgage industry recovers.
Charlotte, N.C.-based Bank of America bought Countrywide for stock that was worth $4 billion when the deal was announced in January but only $2.5 billion by the time the deal closed July 1.
Lewis initially said he wanted to study whether to keep the Countrywide brand, which was extremely well recognized even if it was tarnished.
“I went in thinking that there would be some way to use the Countrywide name,” he said Wednesday. But as the mortgage meltdown worsened, with Countrywide at its center, that possibility disappeared.
Lewis also reiterated his stance on the company’s dividend, now $2.56 a share annually.
“Given our view of things, we do not expect to cut the dividend nor do we expect to have to raise capital,” he said, even though many other financial firms have taken both of those steps.
But he added that Wall Street clearly didn’t believe him on those issues, given how far Bank of America’s stock has fallen in recent months. It fell $1.48 to $22.06 on Wednesday, and is down 46% year to date.
As for the housing market, Lewis said Bank of America’s latest forecast called for a further 15% decline in home prices nationwide, with the decline going into at least the first quarter of next year.
In the case of California, Florida and other markets that had the biggest booms, a further 20% decline is more realistic, he said.
Times staff writer Tom Petruno contributed to this report.