Updated from 3:25 p.m. EST
Bank of America (BAC) shares rebounded off their lows Monday after CEO Ken Lewis called asking the federal government for $20 billion to help it digest Merrill Lynch a "tactical mistake."
Lewis, in a Financial Times interview said the move made BofA look to be in as dire position as Citigroup (C), which last week rearranged the federal government's stake in the company to give it control of as much as 36%.
"In hindsight, it was a tactical mistake because it put us in the same category as Citigroup," Lewis said, according to the FT. "We could still have had 8% tier-1 capital after a $15 billion loss, but we wanted a cushion."Lewis added that a figure of roughly $10 billion would have been more appropriate. Shares dipped as low as much as 17% earlier in the day, but reacteded positively after the FT story was published, closing down 8.1% to $3.63. BofA completed its acquisition of Merrill Lynch on Jan. 1, not long before Merrill was forced to take billions in losses related to writedowns on securities backed by troubled mortgages. Lewis has been criticized for either not doing enough due diligence about the extent of losses within Merrill or overlooking those losses in order to seal a deal. BofA, which also bought Countrywide Financial last summer, has received two capital injections from the Treasury Department's Troubled Asset Relief Program, or TARP, totaling $45 billion. Last month both BofA and Citi plunged to multi-year lows on fears that the government would nationalize both banks. As of Friday, the government is posed to convert a portion of its preferred stake in Citi to common shares. Lewis also signaled to Wall Street a finite timeline for his reign as CEO. He said that he would stay on as CEO until BofA paid back its $45 billion in TARP money -- possibly within two to three years, according to the article. Shares of BofA are down 71% this year.
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