BofA chief says bank doesn't need more taxpayer cash
CHARLOTTE -- The memo dated Monday is Lewis' latest effort to debunk rumors of nationalization of the Charlotte-based bank.
Bank of America spokesman Scott Silvestri confirmed the memo.
The Treasury Department, the Federal Reserve and other banking regulators said Monday that they could convert the government's stock in the banks from preferred shares to common shares. Such a move could result in existing shareholders seeing their shares diluted, potentially reducing their cut of future profits.
"I have said repeatedly that our company does not need further assistance today, and I don't believe we'll need any more in the future," Lewis wrote in the memo. "That includes the potential conversion of the government's preferred shares into common shares that would dilute existing shareholders."
Bank of America's stock price in recent weeks has plummeted as rumors of nationalization circulated in Washington. It's shares tumbled to a 26-year low $2.53 last week, and closed at $3.91 on Monday.
The head of the Federal Deposit Insurance Corp. said Tuesday that additional government steps to shore up the shaky financial system will hinge in part on financial testing to determine how the largest banks would fare in an even weaker economy.
Chairman Sheila Bair said a "stress test" for some 20 of the largest banks this week will help federal policymakers decide "what type of additional capital investments the government may need to make."
Bair also said if the test shows the banks need more capital — and are unable to raise it privately — the government might have to act. The purpose of the "stress test," she said, is to determine whether the banks "have an adequate enough buffer" to survive in an even more dire general economic condition.
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