Tuesday, April 28, 2009

Fed To Tell BofA, Citi To Raise Billions More In Capital

WSJ has yet another leaked version of the stress test results. In summary, both Bank of America and Citi will be urged to raise up to billions more in capital. As this is likely yet another form of PR manipulation, ZH will not comment on this topic until more data is available.

Of course, if the news is true, it would be an epic failure both for the administration, which first strongarmed Lewis to buy Merrill, using lawsuit-worthy mechanisms, and now is forcing the company to raise even more capital as a result of ML's losses, and also for Ken Lewis himself, who repeatedly stated that he will not need to raise more capital, at roughly the same time as his flamboyant disclosure over BofA record Q1 profitability. Class action lawsuit attorneys everywhere just caused Mumm champagne sales to spike through the roof.

Regardless, the news has done a trick on futures which have taken a sharp turn lower in the past hour or so. Tomorrow bank stocks will look like Bremen during the Battle Of Britain.

hat tip Matt Sphere: Related Content
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