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Bank Of America CEO Says ‘Half The Banks Will Be Gone’ In 5 Years
By Mr Mortgage on September 25, 2008 | More Posts By Mr Mortgage | Author's Website
During Ken Lewis’ interview with Maria Bartaromo after acquiring Merrill Lynch (MER), she threw him a curve ball and he actually answered it. I honestly don’t think he was expecting the question and for once, perhaps a bank CEO actually answered a question in public honestly. Below is the transcript of the portion of the interview in question. I cut this from the CNBC site.
The following is a link to the actual interview and CNBC did some crafty editing. They cut out the end of the interview where Lewis actually said that half the banks would not be here any longer. That is a perfect example of the media’s ‘glass half full’ attitude and not looking at the story within the story. This is the very same attitude that led most of the mainstream media to miss the early reporting of the entire credit implosion that we are feeling today. CNBC Ken Lewis interview.
Ken Lewis Interview Transcript:
“LEWIS: I’VE SAID FOR A LONG TIME THERE WERE TOO MANY BANKS CHASING TOO FEW DEALS. I’VE ALSO SAID I DON’T THINK THEI NVESTMENT BANKING MODEL WOULD WORK LONG TERM, WHOLESALE FUNDING IS A TOUGH WAY TO ALWAYS HAVE TO GO. I WAS A LITTLE PREMATURE.IT TOOK SEVEN YEARS TO BEGIN TO HAPPEN. BUT I STILL BELIEVE THAT, THAT A WHOLESALE FUNDED INVESTMENT BANK IS A TOUGH WAY TO GO.PARTICULARLY IN THIS ENVIRONMENT, PARTICULARLY GOING FORWARD.SO I THINK YOU’LL SEE SOME MORE CONSOLIDATION. NOW, YOU MAY HAVE AN INVESTMENT BANK BUY A COMMERCIAL BANK YOU COULD DO THAT.BUT I WOULD BE SURPRISED IF — IF BOTH OF THE BIG ONES REMAINING DON’T LOOK DIFFERENTLY OVER THE NEXT YEAR OR TWO YEARS. AND THEN WITH THE COMMERCIAL BANKING BUSINESS, WE’VE ALWAYS SAID THAT IT’S GOING TO BE MORE OF A BAR BELL, THAT YOU’RE GOING TO HAVE BIGGER AND BIGGER BANKS, BUT FEWER.AND THEN MUCH FEWER SMALLER — I MEAN, NORMAL SIZE BANKS. YOU’LL ALWAYS HAVE THE COMMUNITY, THE VERY SMALL BANKS.IT’S GOING TO BE MORE DIFFICULT EACH AND EVERY DAY FOR MID-SIZED BANKS TO COMPETE WITH LARGE BANKS BECAUSE THEY’VE GOT THE BETTER FUNDING, THEY’VE GOT A BETTER CALL STRUCTURE, AND BETTER BRANDS FOR THAT MATTER.
LEWIS: GOSH, I HAVEN’T THOUGHT ABOUT THAT. MAYBE HALF.“
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