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Ken Lewis Says BofA Is Fine. Do We Buy It?

Stocks in this article: BAC

Lewis' recent declarations are clearly an effort to wipe away some of the negative attention Bank of America has received for the deal, and bolster confidence in the firm's financial health. That's not to say he is misleading the public about BofA's financial standing -- which would be illegal -- but that his carefully-worded statements are not guarantees.

"These are officers of public companies and they're fully aware of their responsibility when it comes to misinformation," says Leo Tilman, former chief strategist at Bear Stearns and BlackRock (BLK) and author of the book Financial Darwinism. "Therefore I have no reason to believe that any of these statements are purposefully misleading."

However, he continues, "in the case of BofA and Merrill, and in the case of Wachovia and Golden West and other things, there was a disconnect between executive decisions and risk management. The rationale was business rationale -- synergies between business lines and market share -- but the risks were discovered later on."

Past performance is no guarantee of future success, and Lewis may well trump competitors to shepherd Bank of America back to pristine financial condition managing risk appropriately, paying off government debt and boosting profitability. The Mississippi native has been in charge of BofA since 2001, expanding its business while limiting exposure to subprime woes that crippled competitors.

Jim McDavid worked with Lewis, as well as his predecessor Hugh McColl, years ago at North Carolina National Bank, which eventually became Bank of America through a series of acquisitions. He characterizes Lewis as an honest, "cautious kind of guy" who is "laid back and reserved," especially in comparison to McColl who was more of a firebrand.

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