http://sg.news.yahoo.com/ap/20081119/tbs-bank-of-america-ceo-f8250da.html
BofA CEO: There are '1 too many' Detroit 3 members
AP
By JEFF KAROUB,AP Business Writer AP - Wednesday, November 19
DETROIT - The chief executive of a major U.S. bank that received $25 billion from the government's financial bailout package said Tuesday that federal aid shouldn't be dispensed to the ailing Detroit Three automakers _ unless they become the Detroit Two.
"I think there's one too many" automakers, Bank of America CEO Kenneth Lewis told the Detroit Economic Club during a meeting in Cobo Center, the downtown convention center that's home to the North American International Auto Show each January. He added he would require consolidation if he was deciding on a bailout.
"I think the American people are suspect of just giving more money and buying more time," he told reporters after the speech. "They want to see that the companies have in fact changed and the strategies have changed."
Treasury Secretary Henry Paulson told Congress earlier in the day the administration remains firmly opposed to dipping into the government's $700 billion financial rescue package on behalf of General Motors Corp., Ford Motor Co. and Chrysler LLC. He said "there are other ways" to help them.
Auto executives, appealing to the Senate Banking Committee on Tuesday, insist they need $25 billion in emergency bridge loans to avert a collapse of one or more of their companies.
Charlotte, N.C.-based Bank of America has received its $25 billion in government funds as part of the bailout effort envisioned to rescue the financial system. Nine large banks, including Bank of America Corp., Wells Fargo & Co., Citigroup Inc. and JPMorgan Chase & Co., received $125 billion last month.
Lewis said Bank of America's was "invited" by the Treasury Department to take its share _ $15 billion for the bank and $10 billion for Merrill Lynch, which Bank of America has acquired _ to stimulate the market by providing more loans. The bank is committed to that goal, he said.
Despite the losses those in the automotive industry would suffer in the short term, Lewis said consolidation should be seen as positive in the long term.
"If those things save it, then they should be real happy," he said. "You can either be happy for a short period of time or moderately happy for a long time. I'm just trying to make sure the industry survives, with so-called 'tough love.'"
On Nov. 7, GM said it suspended talks to acquire Chrysler from majority owner Cerberus Capital Management LP. GM said while the combination would create significant cost savings, it wanted to focus on its cash-flow issues. The automaker warned that it may reach the minimum amount of cash required to run the company before the end of this year.
Lewis was introduced Tuesday by Roger Penske, presiding officer of the Detroit Economic Club, auto racing legend and chairman of dealer Penske Automotive Group Inc.
Although he said he understands the value of exploring the potential benefits to industry consolidation, he told The Associated Press that he wants to see all domestic automakers survive and succeed in obtaining bridge loans from the government.
"I think the automakers need to have support. I can't comment on what type of financial support or where it comes from, but there's no question that if the dollars were available for the financial markets I think they should be available for an industry that has 250,000 jobs here in the U.S., some 1,300 suppliers," he said. "This would be a tremendous impact if we saw one of these companies go down."
During the speech, Lewis said that it's clear that the U.S. is in a recession, which started as crises in the credit and financial markets but spread to the rest of the economy. He doesn't anticipate a real turnaround until the middle of next year, as the housing market hits bottom and "turns the corner."
He also told reporters that he expects "significant" job cuts as a result of the acquisition of Merrill Lynch, but declined to offer a number.
Bank of America last year acquired LaSalle Bank Corp., giving it thousands of ATMs and hundreds of branch offices in Michigan and Illinois. It picked up the unit of ABN Amro Holding Co. as Europe's biggest banks fought over the rest of the Dutch company.
BofA CEO: There are '1 too many' Detroit 3 members
AP
By JEFF KAROUB,AP Business Writer AP - Wednesday, November 19
DETROIT - The chief executive of a major U.S. bank that received $25 billion from the government's financial bailout package said Tuesday that federal aid shouldn't be dispensed to the ailing Detroit Three automakers _ unless they become the Detroit Two.
"I think there's one too many" automakers, Bank of America CEO Kenneth Lewis told the Detroit Economic Club during a meeting in Cobo Center, the downtown convention center that's home to the North American International Auto Show each January. He added he would require consolidation if he was deciding on a bailout.
"I think the American people are suspect of just giving more money and buying more time," he told reporters after the speech. "They want to see that the companies have in fact changed and the strategies have changed."
Treasury Secretary Henry Paulson told Congress earlier in the day the administration remains firmly opposed to dipping into the government's $700 billion financial rescue package on behalf of General Motors Corp., Ford Motor Co. and Chrysler LLC. He said "there are other ways" to help them.
Auto executives, appealing to the Senate Banking Committee on Tuesday, insist they need $25 billion in emergency bridge loans to avert a collapse of one or more of their companies.
Charlotte, N.C.-based Bank of America has received its $25 billion in government funds as part of the bailout effort envisioned to rescue the financial system. Nine large banks, including Bank of America Corp., Wells Fargo & Co., Citigroup Inc. and JPMorgan Chase & Co., received $125 billion last month.
Lewis said Bank of America's was "invited" by the Treasury Department to take its share _ $15 billion for the bank and $10 billion for Merrill Lynch, which Bank of America has acquired _ to stimulate the market by providing more loans. The bank is committed to that goal, he said.
Despite the losses those in the automotive industry would suffer in the short term, Lewis said consolidation should be seen as positive in the long term.
"If those things save it, then they should be real happy," he said. "You can either be happy for a short period of time or moderately happy for a long time. I'm just trying to make sure the industry survives, with so-called 'tough love.'"
On Nov. 7, GM said it suspended talks to acquire Chrysler from majority owner Cerberus Capital Management LP. GM said while the combination would create significant cost savings, it wanted to focus on its cash-flow issues. The automaker warned that it may reach the minimum amount of cash required to run the company before the end of this year.
Lewis was introduced Tuesday by Roger Penske, presiding officer of the Detroit Economic Club, auto racing legend and chairman of dealer Penske Automotive Group Inc.
Although he said he understands the value of exploring the potential benefits to industry consolidation, he told The Associated Press that he wants to see all domestic automakers survive and succeed in obtaining bridge loans from the government.
"I think the automakers need to have support. I can't comment on what type of financial support or where it comes from, but there's no question that if the dollars were available for the financial markets I think they should be available for an industry that has 250,000 jobs here in the U.S., some 1,300 suppliers," he said. "This would be a tremendous impact if we saw one of these companies go down."
During the speech, Lewis said that it's clear that the U.S. is in a recession, which started as crises in the credit and financial markets but spread to the rest of the economy. He doesn't anticipate a real turnaround until the middle of next year, as the housing market hits bottom and "turns the corner."
He also told reporters that he expects "significant" job cuts as a result of the acquisition of Merrill Lynch, but declined to offer a number.
Bank of America last year acquired LaSalle Bank Corp., giving it thousands of ATMs and hundreds of branch offices in Michigan and Illinois. It picked up the unit of ABN Amro Holding Co. as Europe's biggest banks fought over the rest of the Dutch company.
