Back to God's Country

I think I made my position perfectly clear on my last visit to the 'High Desert.' The surrounding area was absolutely beautiful. The drive from Ontario was full of
green scenery. The overall atmosphere of the local people in Victorville was intellectual. Not much to report, better than average room, dinner the night I landed, better than average audience. The feedback has been excellent thank you Victorville very much for your hospitality.

On another note I took some notes today I thought you might find interesting:
In a wide-ranging TV interview on CNBC, CEO Ken Lewis -- who spearheaded Bank of America's controversial acquisitions of Countrywide Financial and Merrill Lynch at the height of the recent credit crisis -- also said that the Charlotte, N.C.-based company (BAC:bank of America corporation)says they remain willing to work with customers to avoid mortgage foreclosure and that tens of billions of dollars of the bank's capital remains tied up in reserves for losses on consumer loans such as mortgages and credit cards. Although they rarely seem to give 'Full Settlement Language' if ever?
Regarding the government's recent investment in the company under the Troubled Asset Relief Program stabilization plan, Lewis said that he regretted taking a larger piece of government money than the company needed, adding that he's "anxious" to return at least some of those funds to the government.
Lewis said that the company is continuing to make "every good loan we can make," despite a continuing rise in consumer loan delinquencies.
He said that the next six months will be tough but that the current economic downturn is beginning to feel to him more like a typical recession than a freefall.
'Mixed signals'
Asked about the current state of the economy, Lewis said he sees mixed indications with some housing sales data coming in better than expected, and some auto sales not quite as bad as forecasted.
"When you see mixed signals, I think it signals that you're getting close to the bottom," the chief executive told CNBC.
He said he shares the consensus view that can have things moderate in terms of the declines and that the economy hits bottom in the second half 2009, with a recovery 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," Lewis said.
He said the recent wave of mortgage refinancing will reduce monthly payments for many borrowers and help kick-start the economy.
Lewis said Bank of America is working on modifying home loans for strapped borrowers.
"Nobody wants to foreclose," he said. "It's bad for everybody, and it's particularly devastating for communities."
TARP regrets
Lewis said he erred by taking the second round of TARP capital from the government when it was closing the controversial acquisition of Merrill Lynch.
B. of A. took another $20 billion after earlier accepting $25 billion.
"That was my mistake," he said. "We took more than we needed. I regret having taken that much. That's why I'm so anxious to pay at least some of it back."
Lewis explained he didn't take the second capital infusion solely because of Merrill Lynch, but also to protect the bank from the economy worsening more than it actually did. He said the government didn't force the company to complete the Merrill Lynch deal, and that it was "the right thing to do" for both B. of A. and the American financial system. Lewis lauded the Merrill acquisition, saying the brokers have more banking products to sell now.
He said the purchases of Merrill and mortgage giant Countrywide "will prove to be two of the best acquisitions we've ever made if you judge us over two or three years, rather than two or three months."
'Earnings power'
When asked about B. of A. shares still trading below $8, the CEO said the stock price reflects "fear of the unknown," as well as questions over the economy and further write-downs.
"This is going to be a tough year for all institutions," Lewis said.
Yet a year from now, "we'll be coming out of this, and you'll be able to see a lot of the earnings power of the financial institutions and the unemployment rate should at least be holding steady if not starting to improve slightly."
Lewis is also optimistic the bank will pass the so-called stress tests being conducted by the government.
"The bad news is it creates a lot of uncertainty," he remarked. "The good news is we will get through it now and hopefully get that uncertainty behind us and get some closure."
He said he doesn't expect the government will ask B. of A. to raise additional capital.
Finally, he acknowledged the compensation system in the banking business is changing during the financial crisis. He expects salaries will represent a greater percentage of overall compensation relative to incentives, which can encourage too much risk-taking.

May I have my 100 million dollars now please. I deserve some kind of bonus right? Everyone else seems to get one?

-Christopher Rockey