Thanks to JJ Hornblass at BankInnovation.net for bringing the Los Angeles Times story about Ken Lewis' intent to pay off Bank of America's TARP debts as soon as possible. While people may quibble over whether or not it's doable, all I can say is bravo sir.
In my comment on JJ's site I wrote, "There's absolutely no reason for a bank to retain TARP subsidies if they can effect a business strategy to configure assets and operations to go forward after paying them off. In fact I believe that's an essential mission challenge all banks that took TARP funds need to make part of their strategic planning. Banking is a highly competitive industry and global competition among the largest banks is hypercompetitive. That universe did not cease to exist when the United States legislated the current suite of laws into existence. Institutions saddled by government strings are disadvantaged in that universe. Mr. Lewis has his head on straight. An independent Bank of America is a better Bank of America. He's looking out for his shareholders and his depositors. If he can find a way to turn TARP into a short-term liability instead of an LBO more power to him."
Can Bank of America accomplish this? Based on the information we have in the IRA databases if any of the large banks can do this it's going to be BAC. It remains one of the strongest super-regional banks in our economy and we in our distillations of their Call Reports see the artifacts of an organized strategic plan to reign in their stray units quarter by quarter. Is it perfect? No. But what is in these times. Bank of America inherited some serious challenges as part of their 2008 acquisitions and Mr. Lewis is right to point out that there's some luck involved as to how the economy will evolve to making his dreams come true.
The bottom line is it's a plan that I personally believe benefits the National Interest. I wish you all the success in the world sir.
We respectfully suggest that other banks, particularly the better off mid-size and community banks, should take note of what Bank of America hopes to do. The next phase of this industry may not be centrally governed but instead highly competitive and possibly fratricidal. There's a lot of private capital out there just waiting to prove that the United States remains a nation with the means to pursue happiness. Speed and flexibility are strategic assets not to be underestimated.
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