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| Photo: Bank of America Chairman and Chief Executive Officer Ken Lewis testifies on Capitol Hill in Washington before the House Financial Services Committee. | ||
The memo dated Monday is Lewis' latest effort to debunk rumors of nationalization of the Charlotte, North Carolina-based bank. Bank of America spokesman Scott Silvestri confirmed the memo.
The memo, posted on the company's internal Web site, comes as the government moves closer to dramatically expanding its ownership stakes in some U.S. banks, including New York-based Citigroup Inc.
The Treasury Department, the Federal Reserve and other banking regulators said Monday 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. Its shares tumbled to a 26-year low of $2.53 last week, and closed at $3.91 on Monday.
Its shares rose nearly 21 percent Tuesday, shooting higher with the rest of the banking industry after Federal Reserve Chairman Ben Bernanke told Congress regulators don't want to nationalize banks. Bank of America stock rose 82 cents to $4.73.
The head of the Federal Deposit Insurance Corp. said Tuesday additional government steps to shore up the shaky financial system will hinge in part on a test to determine how the largest banks would fare in an even weaker economy.
Chairman Sheila Bair said that a "stress test" for some 20 of the largest U.S. banks this week will help federal policymakers decide "what type of additional capital investments the government may need to make."
Bair also said that if the test shows that the banks need more capital -- and are unable to raise it privately -- then 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.
In Monday's memo, Lewis said his bank continues to run its own stress tests, which "continue to show that our capital and liquidity are sufficient to meet today's economic challenges, as well as economic scenarios that include much higher unemployment rates than we have today," he wrote.
By Ieva M. Augstums (AP)
