BofA CEO: Worst bank culprits of credit crisis 'are gone'
Bank of America Corp. CEO Ken Lewis assures us today that the banks mostly responsible for the credit debacle "are gone," thanks to free-market forces.
In an op-ed piece in the Wall Street Journal, Lewis seeks to dispel what he says is "misinformation" about the economic crisis and banks' role leading up to it and in the wake of it.
"The story of our economic crisis mirrors every great market bubble in history," Lewis writes. "Clearly, banks were key participants, but they were not alone. Mortgage lenders, borrowers, regulators, policymakers, appraisers, rating agencies, investors and investment bankers all played a role in pushing economic excesses forward."
Then Lewis lists "a few key claims that have been repeated so often they are now taken to be fact. They are not."
Among those claims, he writes, is that "banks aren't lending." Lewis says that is "simply not true. . . . Most banks are making as many loans as we responsibly can, given the recessionary environment."
Another false claim, according to Lewis, is that "the banks are insolvent." The evidence against that, he suggests, is that "in the past 18 months we've seen fewer than 50 bank failures." And although "there may be more to come . . . the vast majority of banks will weather this economic storm," he asserts.
The strangest "false claim" Lewis lists is this one:
"The banks that caused this mess must be held accountable. In fact, while all banks participated in the bubble economy to some degree, the companies that did the most to cause this mess are gone. The managers and shareholders of those institutions have been held accountable by the toughest, most unforgiving master of all: the free market."
I’m not sure how it’s factually incorrect to say that banks should be held accountable for the credit crisis. More important, I wonder how Lewis would quantify his assertion that "the companies that did the most to cause this mess are gone."
That list would include, I guess, Bear Stearns, Lehman Bros., IndyMac Bancorp and Washington Mutual, all of which have failed. But would it also include Countrywide Financial, which BofA bought last year to save it from collapse? Merrill Lynch & Co., which the bank also bought?
Plaintiffs' attorneys might be interested in hearing more of Lewis' thoughts on the roles of Countrywide and Merrill in the credit bubble.
-- Tom Petruno
Photo: Ken Lewis on Capitol Hill last month. Credit: Haraz N. Ghanbari / Associated Press