Arithmetic overcomes all your issues," he told analysts. "If I ever did anything in the mortgage business, I would have to eat about seven years of my words, so it would have to be pretty compelling."
The nation's largest bank by assets has been haunted by Countrywide's numbers ever since the $2.5 billion deal was completed.
On Wednesday, Bank of America announced, as expected, an $8.5 billion settlement with investors who took a beating on mortgage bonds issued by Countrywide before the housing market collapsed.
The Charlotte, N.C., bank also will swallow an additional $5.5 billion to buy back other defective mortgages in the future. And it took a $6.6 billion hit for lawsuits, foreclosure snarls, a write-off in the value of its mortgage business and loan-servicing adjustments. Because of the many mortgage-related costs, the company expects to show a net loss of $8.6 billion to $9.1 billion in the second quarter, or a loss of 88 cents to 93 cents a share.
Bank of America's shares rose 32 cents, or 3%, to $11.14, in 4 p.m. New York Stock Exchange composite trading. Investors had been worried about previous estimates suggesting Bank of America would have to pay more than $50 billion to escape the Countrywide nightmare and other mortgage woes.
Some analysts said the $20.6 billion charge, to be taken in the second quarter, is a make-or-break gamble by Bank of America CEO Brian Moynihan to turn the attention of investors, executives and employees toward rejuvenating the company.
Mr. Moynihan took over when Mr. Lewis retired at the end of 2009. Bank of America is a laggard among large U.S. banks, hurt by regulatory pressure, shrinking revenue and lackluster loan demand. Regulators in March rejected the company's request for a dividend boost for later this year, and Bank of America's shares are down 24% in the past year.
The 51-year-old Mr. Moynihan looks "worn" but has been able to keep the support of his board amid the turmoil, said a person close to the situation.
Of all the deals Bank of America made during its climb to the top of the U.S. banking heap since the 1980s, Countrywide has spawned more regret than probably any other acquisition by Mr. Lewis or his predecessor, Hugh L. McColl Jr.
"It turned out to be the worst decision we ever made," said one Bank of America director who voted for the Countrywide deal in January 2008.
Mr. Lewis declined to comment through his attorney.
Since the purchase, the bank's real-estate division has saddled it with more than $17 billion in losses, most of it coming from the assets inherited from Countrywide. Even Mr. Moynihan has hinted publicly that the deal was a mistake, telling shareholders in May that the bank agreed to take on Countrywide, based in Calabasas, Calif., "just when you shouldn't have done it."
At the time of the takeover, Mr. Moynihan was running Bank of America's investment-banking unit. He couldn't be reached for comment through a spokesman Wednesday.
The Countrywide bid was a bet the U.S. housing market was nearing a bottom. Regulators saw Bank of America as a savior for the tottering mortgage lender. They believed its failure could pose a major risk to the economy. Bank of America's directors unanimously backed the acquisition.
Mr. Lewis had kept an eye on Countrywide for more than a decade, said a person close to him, while Bank of America was fighting for market share in nearly every corner of the U.S. banking industry.
Mr. Lewis was reluctant about mortgages, though, often saying he liked "the product, not the business." When Countrywide staggered, Mr. Lewis got his chance to pounce. That was consistent with Bank of America's long history of fast-moving, opportunistic takeovers of distressed financial firms.
Most famously, predecessor NCNB Corp. purchased remnants of failed First Republic Bank of Dallas in 1988 at the urging of U.S. regulators, getting nearly $1 billion in tax credits.
The deals didn't always pay off. After the 1998 purchase of Florida-based Barnett Banks Inc., the bank had an exodus of billions of dollars in deposits, said the person close to Mr. Lewis.
In the Countrywide deal, Bank of America served as its own investment banker. Executives deployed 60 analysts to Countrywide's headquarters, and they spent four weeks scrutinizing the mortgage lender's legal and financial predicaments, along with the likely future performance of its loan portfolio.
Bank of America already owned a minority stake in Countrywide, bought for $2 billion in 2007. "I have confidence in our due-diligence teams that we made the right assessment of the downside," Mr. Lewis said in January 2008.
But one person involved in the process said the process was "perfunctory at best" and "designed to have a predetermined answer." And when some people on the due-diligence team worried about Bank of America's liability if mortgage investors demanded the repurchase of Countrywide-issued securities, the issue "wasn't discussed much at all," this person added.
Mr. Lewis did have "reservations" about the deal, but "the longer we looked at it, the more it created its own momentum," said a person close to the former chief executive.
Since then, Bank of America's mortgage division has racked up $17.7 billion in net losses amid rising numbers of homeowner defaults. The company has lost $22 billion since the start of 2010 to investors who demanded the bank buy back Countrywide mortgage bonds.
Other legal payouts include $8.4 billion for home-loan modifications, $108 million to the Federal Trade Commission to settle claims of excessive fees by Countrywide, and more than half of the $67 million fraud-suit settlement involving former Countrywide founder Angelo Mozilo. Mr. Mozilo declined to comment through his lawyer.
Bank of America still faces the prospect of billions of dollars in fines from U.S. and state regulators investigating foreclosure procedures. That mess could cost the company about $7.4 billion on a pretax basis, said Glenn Schorr, an analyst at Nomura Securities.