This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

BofA CEO: Merrill Cushion a 'Mistake'

Stocks in this article: BAC

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.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,688.55 +331.68 1.91%
S&P 500 2,046.83 +33.94 1.69%
NASDAQ 4,723.6640 +79.3520 1.71%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs