No U.S. turnaround till mid-2009: Bank of America CEO

DETROIT (Reuters) - Bank of America Corp (BAC.N) Chief Executive Kenneth Lewis said on Tuesday it is "pretty clear" the U.S. economy is in a recession, and forecast no recovery until the housing market stabilizes around the middle of 2009.

"We won't see a real turnaround until the core problem, housing, reaches a bottom, stabilizes and turns the corner," he said at the Detroit Economic Club.

Lewis said immediate, short-term actions by the government and the private sector to save homeowners and get the foreclosure crisis under control was needed to "get out of this mess."

"I can't promise the pain won't get any worse before it starts to get better," he said.

Bank of America became a major lender in Michigan last October, when it bought LaSalle Bank Corp from ABN Amro Holding NV for $21 billion.

Lewis spoke in Detroit, where the economy has been hit hard by some of the highest foreclosure rates in the nation and a deepening crisis sweeping through the Big Three automakers.

The chief executives of General Motors Corp GM.N, Ford Motor Co (F.N) and Chrysler LLC CBS.UL were set to take their case for a $25 billion bailout to the U.S. Congress later Tuesday. They say a financial rescue is imperative if the industry is to survive the escalating liquidity crisis.

Blaming the housing crisis on government subsidies and excessively low interest rates, Lewis said the mortgage industry needs a "realistic" view of the ability of customers to handle rising payments and rethink its view on short-term, low-interest "teaser" rates.

Mortgage lenders should also retain a portion of originated loans on their own balance sheets and keep servicing responsibilities to the extent possible, he added.

Bank of America became the nation's largest mortgage lender and servicer when it paid $2.5 billion for Countrywide Financial Corp in July.

"The economy is under a lot of stress ... and the industry that has formed the backbone of your economy for a century is in crisis," Lewis said of Michigan.

(Reporting by Soyoung Kim; editing by Jeffrey Benkoe)