BofA's Lewis Has Bailout 'Regret'

Bank of America (BAC Quote) CEO Ken Lewis struck optimistic notes about his firm's profitability and the economic outlook on Thursday, and also conceded a "regret" concerning BofA's Merrill Lynch acquisition.

Lewis said in a lengthy CNBC interview that consumers are benefitting from the refinance boom amid sharply lower mortgage rates, and that there have been modest signs of improvement on delinquency rates for consumer debt like credit cards over the past two months. BofA is receiving unprecedented volume for refinance applications, which Lewis says will "put a lot of money in [consumers'] pockets."

While conceding that he might be "grasping at straws for good news," Lewis also predicted that in one year, unemployment will be bottoming out and the overall economy will show vast signs of improvement. He and other CEOs of major banks, like JPMorgan Chase's (JPM Quote) Jamie Dimon and Citigroup's (C Quote) Vikram Pandit, have been more vocal about their positive views to uplift market sentiment and the public mood about banks.

"One year from now we'll be coming out of this and you'll be able to see a lot of the earnings power of financial institutions," Lewis said.

However, the next six months will be a "gut-wrenching" period, Lewis added, as investors determine whether or not to jump back into the market full force. He predicted that investors will struggle to balance signs of improvement from housing, manufacturers and financial institutions as unemployment -- a lagging indicator of economic health -- continues to climb.

Lewis also sought to dispel criticism of Bank of America's hasty acquisitions of the collapsing mortgage lender Countrywide Financial and troubled investment bank Merrill Lynch. In what seems to be part of a broader strategy to integrate Merrill and shed non-essential assets, Bank of America may also be shopping around its Columbia Management asset management unit, the Wall Street Journal reported Wednesday.