CEO’s words boost BofA


Bank of America Corp. shares rose Thursday for a fourth consecutive day after Chief Executive Ken Lewis said he expected the company to earn “close to $50 billion” this year, before taxes and new provisions for loan losses.

“That kind of cash flow can solve a lot of problems, given time and an improving U.S. economy,” Lewis said in a speech in Boston.

Of course, future loan losses are the wild card. But some investors gave the company the benefit of the doubt: The stock jumped 92 cents, or 19%, to $5.85, outperforming the rest of the banking sector, even on a day that financial issues led the overall stock market up sharply.


Bank of America’s shares are up 86% this week. They remain down 58% year to date.

Lewis reiterated that he didn’t believe Bank of America would need more federal capital to bolster its books, but he left the door cracked open.

“While some banks may need more public support in the future, I don’t believe we will,” he said. Still, he added, “it’s possible that the government could compel us to take more capital pending the results of their stress test. But I’m confident we’ll pass the stress test.”

Banking regulators are in the process of “stress-testing” major banks to determine which financial institutions might need more government money to survive potential loan losses.

Lewis also repeated his opposition to the idea of the government’s taking control of the nation’s biggest banks.

“The last thing we need to do is start nationalizing banks,” he said. “By nationalization, I mean a full-scale takeover of an institution by the government in which common shareholders, and possibly debt holders as well, would be wiped out. This, in my view, would be a nightmare.

“The announcement of nationalization would immediately undermine confidence in the financial system even further and send shudders through the investment community,” Lewis said. “And government control of large banks would politicize lending decisions and the capital allocation process, damaging the economy.”


The Obama administration has said it has no plans to nationalize banks. But if loan losses deepen and the Treasury is forced to pump more taxpayer funds into the largest banks, the government’s rising stake in the institutions could amount to de facto nationalization.