Bank of America Corp.'s chief executive, Ken Lewis, praised the banking industry's regulators in a speech today, though he added that more rules won't necessarily fix all of the sector's problems.
“The Fed, the Treasury, the OCC and the FDIC have performed very, very well through this crisis,” Lewis said, speaking in Washington, D.C. He said that Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson “have made very difficult decisions, and in my view, they've made the right ones. They understand the trade-offs, but their primary goal has been to stabilize the markets, to ensure accountability, and to respect the American taxpayer.”
But Lewis also said that government regulation isn't a cure-all. He praised the dismantling of rules that forbade interstate branch banking and mergers between commercial and investment banks. Lewis declined to predict when financial markets might recover, but said that the current turmoil would result in the industry's consolidation – meaning that less efficient banks will be bought out in order to survive, or will fail. Monday, Lewis predicted that about half of the nation's 8,500 banks will exist five years from now.
He cautioned that consolidation means “less outright failure, and more of the walking wounded.”
“I think that's a good thing,” he added. “The survivors will be stronger, more diversified, and better prepared to thrive in cycles to come.”
Lewis couldn't help but brag about his bank, which has been viewed as a relative stalwart amid crashing financial markets. It purchased Merrill Lynch over the weekend, which enlarged its footprint on Wall Street and secured its position as one of the industry's rescuers. It also affirmed Lewis' theory of industry consolidation.
Lewis also acknowledged that he “couldn't have been more wrong” when he said early last year that the growth of the global financial markets ‘will only accelerate in the years to come.'
Said Lewis: “My only defense is, I was far from alone.”
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