Kenneth D. Lewis, Bank of America Corp.'s chairman, chief executive, and president, went to Detroit on Tuesday and doled out advice to fellow lenders and the city's major industry, the ailing automakers.

Lenders must stick to stringent standards, such as 80% loan-to-value ratios, and "retain a portion of their originated loans on their own balance sheets," Mr. Lewis said. He also advised avoiding short-term, low-interest "teaser" rates, according to prepared remarks for a speech he delivered to the Detroit Economic Club.

Still, lenders do not bear all the blame, Mr. Lewis said; borrowers need to take some responsibility.

In fact, policymakers in Washington looking to help homeowners facing foreclosure must be careful not to overstep, he said.

"Foreclosure mitigation programs have to be structured so as not to attract homeowners who don't need them," Mr. Lewis said. "Unfortunately, this is happening too often, as people who are underwater on their loans, but who are able to make their payments, seek the same benefits they're seeing their neighbors get."

For most homeowners who stay put, the value of their home would appreciate, he said. "It may not seem fair, but these are emergency assistance programs, not an attempt to rewrite every mortgage on the books."

Mr. Lewis did not detail what he thinks the government should do with Fannie Mae and Freddie Mac, but he did say: "I think we should move in the direction of a system that relies more on private-sector institutions without government guarantees to intermediate between originators of mortgages and investors in the secondary market, with some limited role for the government to ensure liquidity."

He also had something to say about Michigan's embattled auto industry.

According to the Associated Press, Mr. Lewis said after the speech that "there are too many automakers," and that two of Detroit's mainstays should merge. According to the AP, he said that if he were overseeing the government's $700 billion of bailout funds, he would want a merger to prove that automakers were worthy of the financial aid they are seeking.

His $1.83 trillion-asset Charlotte company entered Michigan in a major way in October of last year by purchasing LaSalle Bank Corp. from ABN Amro Holding NV. B of A also became the nation's biggest mortgage lender after its July purchase of Countrywide Financial Corp. The company had $257 billion of residential mortgages on its books at Sept. 30, representing 27.2% of total loans, according to a quarterly filing with the Securities and Exchange Commission.

Under settlements with several states, B of A has agreed to modify 400,000 mortgages for Countrywide borrowers, including 14,000 in Michigan. That program is set to start Dec. 1, but Grais & Ellsworth LLP is trying to organize bondholders to sue B of A over it.

Mr. Lewis told the Detroit club that the mortgage crisis is unlikely to bottom out until mid-2009 at the earliest.

"We need to think hard about what exactly went wrong … not just to fix blame, but to decide how to change the home lending industry, so that it once again will promote financially healthy households and communities."

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