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Read the entire interview for access to an audio file of Lauren LaCapra's interview with Jerry and Jonathan Finger.

Updated from 2:46 p.m. EDT

Bank of America


Chairman and CEO Ken Lewis appeared on television Thursday morning in a

lengthy interview

about his company, its contested acquisitions and the state of the economy.

Lewis painted everything in rosy hues -- predicting the economy will vastly improve over the next year, characterizing Bank of America as strong and profitable, and defending the acquisitions of Countrywide and Merrill Lynch as some of the best.

One long-time stockholder, though, sees things differently.

Jerry Finger, a high-profile investor who has held a stake in BofA and its predecessors through his investment firm Finger Management for over a decade, and his son Jonathan, who is a partner in the firm, spoke with

to provide some counterpoints. Finger Management has launched

an effort

to convince shareholders to vote against Lewis and two other board members at the upcoming annual meeting.

A condensed version of the interview with Jerry and Jonathan Finger follows: What did you think about all of what Ken Lewis said this morning on CNBC


Jerry: He left out so many things. He didn't address the capital issues. BofA right now only has 2.8% equity relative to total assets. They'll more than likely have to increase their capital. And then he didn't

fully address their present asset quality. For example, the credit-card delinquency is about almost 8%, and that corresponds to peers that are at about 5%. He said that those are tapering off a bit and he was striking an overall optimistic tone. Do you think he was not being totally transparent about what's going on?

Jerry: I don't think that he's really looking at the situation in a realistic way. We're concerned as shareholders with shareholder value. What has happened over the term of his presence, over let's say the past five years, I believe that the bank's fiscal situation has deteriorated. It seems like Ken Lewis is determined to stay there until he pays back the TARP money, and he promotes Bank of America as a healthy institution in order to turn sentiment around. What do you think will happen if he does stay at the firm?

Jerry: We need a change. We need a different method of corporate governance and a different leadership and management. I don't think it's a good idea that he stays, and that of course is the object of our efforts.

Jonathan: We think there is a significant credibility issue that Mr. Lewis has with investors and Wall Street analysts... I think people were shocked when they did the Merrill Lynch deal, but then they were also shocked when he didn't tell anybody about Merrill Lynch's losses in October and November, and then also he comes out in January and says, 'Oh, by the way, we're going to take another $24 billion in TARP money. As a high-profile investor in Bank of America, do you have any plans for what you're going to do with your position? Have you sold any of your shares or changed your position at all amid all of this turmoil with Bank of America, and do you have any plans to do anything whether or not Lewis is ousted from his roles on the board and as CEO?

Jonathan: We are long-term holders. We've held our stock for over 10 years at this point. The reason we continue to hold the stock is because we do believe that the company has significant franchise value. So we would continue to expect to hold the stock, perhaps two or three years down the road if it recovers, having gone through this situation, we may reduce our stake somewhat.

Jerry: Look, we have reduced our stake over the last 10 years just to have some diversification. We were long; we plan to be long-term holders of these million-and-one shares... We hope with some change, the stock can go back to the $30 level, even if not the $50 level it was before. So it's not a Bank of America issue, it's an issue with management right now?

Jerry: Yes, it is. In fact, I think it's an issue that really pervades the whole corporate structure in this country. Boards of directors must realize their responsibility and accountability to shareholders. 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. 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) 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. Playing devil's advocate here, Lewis has spent decades at Bank of America and has built the franchise -- there are some good things on his resume, as well as the other things you cite. Do you think it's fair that he should go down because of these couple of things, especially when it's not clear how things will play out a few years down the line?

Jerry: If you go back and look at the numbers I've presented relative to earnings and hard book value per share, I couldn't agree that he has done a good job in the last five years. I don't think anybody else would, if you check with security analysts.

Jonathan: Also, I would add that the amount of shareholder value that has been destroyed in the market, I think he does deserve for this to cost him his job. We think there needs to be accountability, and they did not protect shareholders when they bought Merrill Lynch. It was a deal that blew up in their face. I mean, remember they did this on 48 hours of due diligence.

Jerry: Saturday afternoon and Sunday, they did the whole deal. The board voted on it.

Jonathan: If you're going to do something that quickly, the board and management should say, there's no way we can collect all the information, let's not pay too large of a price, right? Let's be careful. They paid a massive premium when it appears they didn't even need to pay any premium.

AUDIO: The Fingers on friction between BofA and Merrill execs.

Jerry: This was when Lehman had already gone broke. This was when the debt securities were really going down in value. It was a scary time. They paid -- how much? -- $29 a share, and it had closed the day before at what 17? That's a pretty good premium over market price.

Jonathan: People expected Merrill Lynch to have trouble and possibly have to file for bankruptcy. So they made a huge miscalculation here and there should be some accountability.