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Bank Of America Chief: ‘Even Chance’ U.S. In Recession

Last Thursday, the Charlotte Observer reported that Bank of America’s chief executive Kenneth Lewis told an audience at North Carolina State University that there is an “even chance” the U.S. is already in a mild recession, according to prepared remarks. The publication also said that last month the head of the Charlotte bank predicted minimal growth early in the year, “almost like a recession.”

Yet, the head of the largest commercial bank in the United States by both deposits and market capitalization was upbeat about the U.S. economy in the long term. According to the Observer:

In his remarks, Lewis acknowledged the role investment bankers played in creating complex mortgage-backed securities that have since plunged in value amid the housing crisis. However, he said the banking industry’s “originate-to-distribute” of making loans and then packaging them into securities for investors hasn’t been discredited.

Lewis told the newspaper:

Just as the bursting of the Internet bubble in 2001 was not the end of the Internet, the credit crunch of 2007 will not be the end of mortgage finance. The forms this activity takes will be simpler, but it will continue.

You may recall that I mentioned Ken Lewis in a post from last summer. On June 21, 2007, I wrote:

In an interview with Bloomberg on Tuesday, Bank of America’s Chief Executive Officer Kenneth Lewis said the U.S. economy will pick up speed due to a recovery in the housing sector. Lewis predicted, “You’ll see the economy begin to pick up in the third and fourth quarters,” and the slowdown in home sales is “just about to be over.” He went on to say that the housing market will begin to improve in the next month or two, forestalling a recession, according to Bloomberg. Lewis believes that job growth will lift home prices and reinvigorate construction by early 2008.