Inc. may need to raise as much as $10 billion in new capital, according to people familiar with the matter, as the government continues negotiations with banks over the results of its so-called stress tests.
The bank, like many others, is negotiating with the Federal Reserve and may need less if regulators accept the bank's arguments about its financial health, these people said. In a best-case scenario, Citigroup could wind up having a roughly $500 million cushion above what the government is requiring.For certain banks who can't raise new funds from private investors, federal regulators are allowing banks to consider giving the government stakes in their common equity, people familiar with the matter say. That would help fill their capital needs but would also raise thorny questions about how close a role the U.S. will play in their daily operations.
The outcome of the stress tests could play a major role in shaping the next phase of the U.S. government's intervention in the nation's ravaged financial system. After the results, banks will have 30 days to give the government a plan and six months to put it into effect. The banks are expected to reveal their plans next week.
Concerned about investor and depositor panic, government officials have said banks needing more capital should not be viewed as being at risk of collapse. In fact, the government has said it would not allow any of the 19 banks undergoing the test to fail.Banks have been scrambling over the past week to refute the Fed's preliminary conclusions. Bankers say those negotiations are part of the reason the government has pushed back its announcement of the results.
"The gloves have been taken off, and there's some real battles going on right now," said Gerard Cassidy, a bank analyst with RBC Capital Markets.
The last paragraph from the WSJ article is simply the most stunning example of the banks' ongoing hypocrisy:
Some banks are haggling with the Fed over how it calculated their projected 2009 and 2010 revenues -- a central factor in gauging banks' ability to absorb losses. Some have pushed the Fed to use their strong first-quarter performances as a baseline, even though many acknowledge their first-quarter results are likely unsustainable.They are haggling with the Fed based on their "strong" first quarter results (which were all due to taxpayer gifts to every single bank via the AIG funnel)? Come again? Are there any boards of directors left at any of these firms to supervise the sheer lunacy that management teams projectile vomit in the general direction of Barak Obama, Tim Geithner and CNBC's audience?
Why should Chrysler creditors be forced to suffer and be scapegoated in front of the entire world, while we don't know who one single large creditor of a Citi or of BofA is? .... but we can speculate...Hey Obama/Tim - how about some bank creditors suffer a loss here and there too in your witch hunt against "all those self-serving Wall Streeters." Does it maybe have to do with the fact that these are not really Wall Streets at all but the very same gullible fools who are supposed to lap up the $1 trillion + in USTs you will be shovel feeding over the next year... yes, the same investors who still have their investment in Freddie and Fannie marked at par compliments of Uncle Sam and Joe Taxpayer.
All is good though: CNBC just announced that all is priced in, and that no bad news can ever move the market lower as everything negative has been factored in every single stock price in perpetuity and then some.
Enough with the hypocrisy! When is Lewis Black going to do a Wall Street special?