Bank of America Chief Executive Officer Ken Lewis said he will complete the takeover of Merrill Lynch by the end the year, defying skeptics who speculate the economic slump will undo his $19 billion purchase.
The acquisition is “on track,” Lewis, 61, told reporters after a speech at the Detroit Economic Club on Tuesday.
Bank of America, already the nation's biggest home lender and credit card issuer, is adding Merrill's brokerage business with the help of a $25 billion government handout meant to thaw frozen credit markets. As his own shares hover at a 13-year low, Lewis said the economy won't rebound anytime soon, saying the gross domestic product isn't likely to expand until late next year and that credit card losses will probably reach a record.
“We won't see a real turnaround until the core problem – housing – reaches a bottom, stabilizes and turns the corner,” Lewis said in Detroit. Charlotte-based Bank of America became a leader in home lending and credit cards after buying Countrywide Financial Corp. and MBNA Corp.
Some homeowners who can pay their mortgages are trying to take advantage of Bank of America's efforts to modify as many as 400,000 mortgage loans to keep borrowers in their homes, Lewis said.
“These are emergency assistance programs, not an attempt to rewrite every mortgage on the books,” he said.
Lewis also called for more conservative mortgage lending, including requiring larger down payments and fewer short-term “teaser” interest rates.
Lenders should hold more loans rather than selling them to the secondary market, which Lewis said ensures greater responsibility for relations between the bank and borrower.
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