Despite all the capital the Treasury has put into large US banks, their stocks may be about to make new multi-year lows.

While the housing market is still hurting their derivative holdings, consumer credit and corporate lending troubles may just be beginning.

According to Reuters, Friedman, Billings, Ramsey Group cut its rating on Bank of America (BAC) to "underperform" and put a price target of $9 on the bank. Earlier in the day news reports said that HSBC (HBC) would have to raise $14 billion to cover losses.

Since BAC has not traded below $10 in several years and it is unlikely that large banks will be profitable for several quarters, the next round of losses will force them to bring in more capital. If this is private money, it will come dearly, probably below market and with large warrant coverage. If the money comes from Treasury, Congress will expect a higher price tag than it did with the last round. Either path leads to more dilution.

Bank of America may actually be the next victim of bank numbers. Its purchase of mortgage giant Countrywide could lead to a string of quarterly losses as the housing market drops. It has a market cap of $64 billion. If it has to raise $15 billion at a below market price, its stock could actually drop to $7.

The notion that the government will have to nationalize the banks is almost certainly wrong. It would send a message the the US financial system cannot be repaired. That does no mean that the Treasury will be able to avoid buying more preferred stock, diluting shareholders by tremendous amounts once again.

Douglas A. McIntyre

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