BofA's Lewis: TARP Regrets and 'Mixed' Economic Signals
It was a mistake to take so much TARP money from the government and, unfortunately, it will take a while to pay back, Ken Lewis, the chief executive of Bank of America, told CNBC Thursday.
"That was my mistake. We took more (TARP funding) than we needed, in an abundance of
caution, and I regret having taken that much," Lewis said. And it will take some time to pay the government back, he added.
"It's going to be several quarters before we have the opportunity. If you had a window, you could pay some of it back, but not all of it back; we'd like to do that, at least."
Bank of America, along with other major banks like Citigroup and JPMorgan Chase, have received federal loans through the Troubled Asset Relief Program. But with the funding has come some government involvement in banking issues and operations that the banking community has later regreted. That has made repaying the government funds a priority for many in the banking sector. Four small banks repaid their TARP funds this week (Read Story).
On the Economy
In the meantime, the economy is showing some signs of a turnaround, he said.
"I think we're at a point where you're seeing mixed signals, housing sales a little better than you think, or car sales not being as bad as you think, and when you see the mixed signals, I think it signals that you're getting close to the bottom," Lewis said in an interview on "Squawk Box."
Still, a full recovery remains some time away, he indicated.
"We would actually share the blue-chip consensus that in the second half, things moderate in terms of the declines, and that we hit bottom in the second half, and that we start to come out of this in the first part of next year. You can't throw as many things as we're throwing at it and not break the back of this thing."
Eventually that will mean a recovery in BofA's stock price, he suggested.
"It's the fear of the unknown. How bad is the economy going to get? Are there further writedowns? How long is this economy going to deteriorate? I think that fear of the unknown, as things start to change, starts to change as well, and then we'll start seeing our stock, and bank stocks in general, coming back."
In the wide ranging interview, he addressed other subjects as well ...
He particularly noted efforts on the housing front.
"Don't underestimate these re-fis. That's going to put a lot of money in people's pockets, and we've never seen volumes like we've seen."
He also encouraged people facing problems making mortgage payments to renegotiate.
"Nobody wants to foreclose. It's bad for everybody, particularly devastating to communities."
"You're getting into dangerous territory, changing contracts, going back on words of others in the government, lack of continuity. Hopefully, as we step back and become a little more thoughtful, cooler heads will prevail, and we'll get this thing headed in the right direction."
"This is going to be a tough year for all institutions. You'll see, even this year, when you look at pre-tax, pre-provision, you'll see the earnings power of this machine, and then you'll see it really start to come to fruition in 2010, and then 2011 should be the year that you get a lot of this behind you and see the full earnings power of Bank of America."