Bank of America Corp. chief executive Ken Lewis Thursday said he sees a cause for optimism for the nation's economy, but with a "gut wrenching" next six months and a bottoming out coming in the second half of the year and the full earnings power of the bank only visible in 2011.

"I am optimistic that we're getting close to the bottom and that we'll be seeing signs of recovery," Lewis said in an interview from College Station, Texas, aired on CNBC.

"I would say that it's going to be a gut-wrenching time in a positive sense," he said, with enough positive signs that will encourage businesses to invest.

Lewis said he sees conditions resembling "an old-fashioned recession," with mixed economic signals.

Lewis said the bank has seen a rise in the delinquency rates "across the board" for consumer loans. However, he added that there is some evidence delinquencies in some products is "actually starting to abate — and you can't call it a trend yet, but, boy, (if) we saw a few months of that, then that would be very encouraging. It's just a little early. "

As for Bank of America, Lewis said he regretted taking more TARP money from the government than necessary, and is "anxious" to repay at least some of those borrowings, but that may be several quarters before that takes place.

He also noted that the "full earnings power" of the bank will be be seen in 2011. He also denied complaints by some that banks in general were holding back on lending, saying the bank is making "every good loan we can make."

He did have some words of criticism for Washington, complaining that regulations are forcing tens of billions of dollars in capital to be tied up in consumer loan loss reserves, and that government actions in the recent past were made "in haste," but that, of late, "cooler heads" were more evident.

Lewis also reiterated his support for the bank's acquisition of Merrill Lynch, calling the buy the "right thing to do" for the bank.

Asked about employee compensation issues in light of headlines and complaints, Lewis said the bank is weighing plans to issue higher salaries and provide less incentive-based pay.

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