November 21, 2008

Bank of America Corp.'s (BAC) chairman and chief executive said the economy is in a "global recession" but might see a turnaround in the middle of next year, and when it does, the U.S. banking industry will be completely different from what Americans are used to.What started last year as a crisis in the subprime-mortgage markets became a global credit crisis, and now has become a global recession," Kenneth D. Lewis said in prepared remarks to the Executives' Club of Chicago. He doesn't expect a rebound until the housing market recovers, with the U.S. economy contracting through midyear.In the meantime, Lewis said the financial-services industry will get a much- needed makeover. Financial stocks' share of the market value of the S&P 500 Index grew to 22% from 8% during the past 17 years, and "it would be fair to say that growth in financial services was overdone," Lewis said. "It wouldn't hurt to remind ourselves that we play a supporting role in the economy - not a lead role.With all the business practices and institutions getting blamed for the credit crunch, there were some things that worked well, he said. They included traditional mortgage lending, banking supervision from the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp. and banks that combined commercial and investment banking.