Colin Barr

Following the money in banking, economics, and Washington

Bruce Berkowitz, BofA's flag-waving fan

June 10, 2011: 6:23 AM ET

July 4 is coming right up, which makes it the perfect time to honor heroic Americans such as George Washington, Abraham Lincoln and Ken Lewis.

You may not immediately associate Lewis, the monomaniacal former CEO of Bank of America (BAC), with love of country. But value investor Bruce Berkowitz – who runs BofA's 12th biggest shareholder, the Fairholme funds – begs to differ.

A bet that isn't paying off

BofA has many problems, from new regulations that are slashing its lucrative fee revenue to a thick legal file stemming from its horrendous mishandling of foreclosures. But to listen to Berkowitz, the real explanation for the sharp decline in its stock lies in anti-Americanism.

"They are being killed for being patriotic, taking over Countrywide," Berkowitz blathered Thursday on Bloomberg television. "One day it will serve a good purpose of making loans."

That is indeed a fine purpose and we will all feel proud. Though perhaps not quite as intensely as Berkowitz, who got soaked buying AIG (AIG) and is in the red on his BofA purchases -- yet certainly hasn't surrendered any enthusiasm in the experience.

Unlike many, he is a fan of Brian Moynihan, who replaced Lewis and has handled the regulatory side of the job with unusual ineptitude. Moynihan "is doing a good job," Berkowitz claimed, adding that he admires Moynihan's belated decision to try to fix the many problems BofA took on when Lewis bought Countrywide three years ago. Progress is slow, judging by BofA's poor score on goverment mortgage modification programs, but you won't catch Berkowitz checking his watch.

"They have 30,000 extra people working the residential mortgage issue to get it over as quickly as possible," Berkowitz said. "They are making all the right moves." If nothing else, this is a case study in defining competence down.

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About This Author
Colin Barr
Colin Barr
Senior Writer, Fortune

Colin Barr has covered finance for Fortune.com since November 2007. Previously he was a writer and editor for TheStreet.com, winning a 2006 Society of American Business Editors and Writers award for "The Five Dumbest Things on Wall Street," and for Dow Jones Newswires. He is a 1991 graduate of Penn State and lives in Port Washington, N.Y., with his wife Meena Bose and their two kids.

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