Bank of America Corp's current chief executive is doing the right things to fix the company, but it will take time, said Hugh McColl Jr., the retired architect of the second biggest U.S. bank.

Brian Moynihan, about to enter his third year as CEO in January, has been selling off assets to build capital, cutting expenses and working to settle lawsuits tied to the bank's Countrywide Financial Corp acquisition.

But he still faces pressure to meet new international capital standards, boost revenue and improve a slumping stock price.

I think they've been doing as well as anyone could dealing with the problems they have, McColl said in a wide-ranging interview this week with Reuters about the banking industry and the economy. And Countrywide is a huge problem, and Brian doesn't try to pretend that's not so.

Moynihan isn't fixing the problems as fast as people would like, but that's because he's facing issues that take time to work through, he said.

He's dealing with it at a pace at which it can be dealt with, McColl said. I think he's doing what you have to do.

A decade after his departure, McColl, 76, makes it clear that he's no longer involved in Bank of America's affairs, but he talks with Moynihan about once a month. I see him when he wants to see me, McColl said.

Through a series of deals in the 1980s and 1990s, McColl turned a regional North Carolina bank into the coast-to-coast giant now known as Bank of America. He retired in 2001, but has stayed active in financial ventures and in civic affairs in his hometown of Charlotte, North Carolina.

McColl has an office in Bank of America's headquarters building, but it's separate from the bank's operations.

In recent years, the bank he once led has suffered losses tied to its 2008 Countrywide purchase, a deal forged by McColl's successor, Ken Lewis. Moynihan took over in January 2010.

Bank of America had to be bailed out by the U.S. government during the financial crisis, stirring debate over whether banks had become too big to fail.

McColl said the size of big banks didn't cause the financial crisis and players at every level of the field contributed. But he acknowledged giant institutions can be difficult to effectively manage.

If you run a multi-faceted company, you have to actually run it, and you have to control it, McColl said.

Not the government, you the CEO has to control it. Yes, I think it can be done. Do I think it's easy? No, he said.

When McColl ran the bank, he once entered the insurance business, but later found that even his own top executives would not buy the bank's products because they were too expensive. He later exited the business, he said.

SLOW CONSOLIDATION

The biggest banks in general face formidable challenges now, including mortgage-related lawsuits, a housing market that still hasn't hit bottom and slow economic growth, McColl said. That slow growth should weigh on earnings, he added.

Banks are a mirror of the economy around them, he said. Banks will recover when the country does.

Since retiring from Bank of America, McColl has stayed busy with a private-equity firm, an eponymous middle-market investment bank, a fine art dealership and a cattle ranch in Texas.

In the financial arena, Falfurrias Capital Partners, the private-equity firm that McColl co-founded with former Bank of America Chief Financial Officer Marc Oken, recently invested in an equity research firm and is in the process of raising $200 million for a second fund. At McColl Partners, the mergers-and-acquisitions business is quite good, he said.

The firm has advised banks on mergers and recapitalizations, but there is a dearth of buyers lately for smaller institutions, many of which are still weighed down by bad loans, he said.

I think consolidation will continue, McColl said, but it will be slow.

(Reporting By Rick Rothacker; editing by Carol Bishopric)