Bank of America Holder Rebukes Lewis

TheStreet.com: There's obviously a lot of anger from various shareholders, and Lewis was up there today saying that Countrywide is already hitting a "sweet spot," and predicting that years down the road, people will see the Countrywide and Merrill deals much differently than they do today. What's your opinion of that?

Jerry: Well, Countrywide, the acquisition, I think posed a great risk...they took on [tens of billions of dollars] worth of risky assets -- about 1.6 times the tangible book value of BofA...Those are the subprime loans, the home equity loans, the pay option-arm loans, which have a negative amortization, the derivative assets. I mean, that was a heck of a risk. And you may recall five states sued them prior to closing the transaction, and then another five sued them after the transaction and you don't know what that legal liability is going to be. In other words, I don't think they really look at the risk-reward ratio. I don't think that they really try to protect shareholder value.

Jonathan: Countrywide might be doing well because of the refi boom that's going on now, but they took a lot of risk to buy that company and they took a lot of bad assets onto their books. And some of those research analysts think they're going to charge off another $3 to $6 billion from that book of loans that they acquired. So you have to kind of look at the whole picture.

TheStreet.com: Of all the things that could have apologized for or said he regretted, all he said was that he regretted taking too much government money because it categorized the company with Citigroup (C Quote) and weaker competitors. Do you think that was enough for him to say, or what did you expect him to say?

Jonathan: The TARP money comes with a cost of 8% on the $20 billion, which is $1.6 billion a year in terms of just after-tax preferred dividends, but also that money is ahead of shareholders. We would have rather that he said "We realize that we overpaid for the Merrill Lynch transaction," but I don't think there's going to be a mea culpa from this management or board.