Nationalization of banks would be a “nightmare” that would further undermine confidence in the nation’s financial system, Bank of America Chief Executive Officer Kenneth Lewis said today.
In Boston for a speech, Lewis said a full-scale government takeover in which shareholders would be wiped out would “send shudders” through the investment community and is not necessary to stabilize the country’s banking system.
“It would also give the false impression that all banks are insolvent and investors would immediately start betting on which banks would be next, possibly creating a self-fulfilling prophecy,” Lewis told about 450 corporate leaders at a luncheon sponsored by Boston College’s Chief Executives’ Club of Boston.
He said government control of large banks would “politicize lending decisions” and damage the economy.
Lewis, who has been criticized for large bonuses Merrill Lynch executives collected as the government was providing billions in bailout money, said he understands the outrage felt by taxpayers. Bank of America acquired New York-based Merrill on Jan. 1.
Lewis said because of the decline in its 2008 earnings, Bank of America paid no year-end bonuses to members of its executive management team.
But he said extending such caps deeper into an organization could prompt non-executive associates to go to work for foreign banks.
“Such a loss hurts our company and our shareholders,” Lewis said. (AP)
