Video: BofA CEO: 'Economy is not getting better'

updated 2/6/2009 12:28:30 PM ET 2009-02-06T17:28:30

In his latest move to show support of his bank, Bank of America Corp. Chief Executive Ken Lewis spent almost a million dollars this week to buy additional shares of his struggling bank.

He also told employees in a memo that the bank’s board, “unanimously endorsed our business model, strategic direction and the team,” at its regular meeting on Jan. 28.

The moves are Lewis’ latest effort to convince employees, investors and the board that he and his management team can lead it out of its current crisis.

Lewis purchased 200,000 shares for $958,340 on Wednesday, according to a filing with the Securities and Exchange Commission on Thursday. It’s the second time in recent weeks that Lewis has pumped his own money into the Charlotte, N.C.-based bank. Two weeks ago, he bought 200,000 shares for $1.2 million.

The filing came as the Bank of America’s shares rebounded from a 25-year low Thursday afternoon, following other financial stocks higher as reports surfaced that the government may modify accounting rules that have been blamed for contributing to banks’ troubles.

The bank’s shares have been pummeled in recent days following the disclosure of the bank’s first quarterly loss in 17 years and mounting concerns about its recent Merrill Lynch & Co. acquisition. There’s also unrelenting concerns that the government’s future plans to help prop up banks could hurt shareholders.

Last week, Lewis went before his directors in Charlotte for “the longest board meeting in anyone’s memory,” he told employees in the memo issued Monday.

“Every member of the management executive team participated, as we discussed in great detail the company’s most recent performance and our plans for getting through the recession in a position of strength,” he wrote in the memo.

Some analysts said Lewis’ job might be on the line, but lead director O. Temple Sloan Jr. later issued a statement of support for the bank’s management team.

In the memo, Lewis called the company’s performance in January “encouraging.” The “extreme dislocations in the capital markets we suffered last quarter seem to have moderated” but “credit costs continue to be a big issue.”

He also acknowledged employees are disappointed about cuts to their bonuses. He noted that higher-ranking executives are taking deeper reductions and that neither he nor his top lieutenants are receiving payouts for 2008, according to the memo.

Major Market Indices

Last month, it was learned that Merrill Lynch, with Bank of America’s knowledge, had moved up year-end bonuses for executives so they could be awarded before the acquisition was formalized Jan.

1. The bonuses were given as Bank of America was approaching the government for more money.

Former Merrill Lynch CEO John Thain, who had taken over as head of the combined company’s wealth management business, resigned after news of the bonuses broke.

Thain and Bank of America’s chief administrative officer, J. Steele Alphin, have been subpoenaed by New York Attorney General Andrew Cuomo amid an investigation into the timing of the Merrill Lynch bonuses.

On Monday, North Carolina Attorney General Roy Cooper also made a request for documents from Bank of America about the bonuses. The North Carolina Department of Justice issued an “investigative demand” seeking records, including a list of Merrill employees who received bonuses, communications between Merrill and Bank of America executives and details of the bank’s federal assistance use.

Bank of America is required to respond by March 4, according to the 11-page demand.

“Public money is at stake,” Cooper said in a statement.

Investors have been extremely anxious ahead of President Barack Obama’s unveiling next week of a new framework for spending what’s left of the $700 billion financial bailout which Congress created last year. Investors fear that the administration’s moves could hurt shareholders by diluting the value of their stock.

Bank of America has already received $45 billion in government aid, including a $20 billion injection last month to help it absorb losses from its Merrill Lynch acquisition.

On Thursday, Bank of America spokesman Scott Silvestri declined to comment on the stock price, the likely effect of a new rescue plan or calls for management changes.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.95%
$30K home equity loan FICO 5.19%
$75K home equity loan FICO 4.58%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.40%
13.40%
Cash Back Cards 17.92%
17.91%
Rewards Cards 17.12%
17.11%
Source: Bankrate.com