Banking, finance, and taxes
Bank "Stress Test" Tab Almost $60 Billion (C)(WFC)(BAC)
Published:
Last Updated:
As more information hits the press about the amount of money the government will say big banks will need due to the results of “stress tests”, it is already clear that three banks, Citigroup (C), Wells Fargo (WFC), and Bank of America (BAC), will need a total of nearly $59 billion in additional capital.
Bloomberg reports that Wells Fargo (WFC) will require $15 billion to prop up its balance sheet. Earlier reports said that Bank of America will need $34 billion and Citi needs between $10 billion and $15 billion.
The firms will probably not have to actually raise much money. They can negotiate with the government to convert preferred shares into common. The consequences of that action would cause two problems. The first is that common shareholders will be significantly diluted. In the case of Citi, the dilution could be more than 20%.
The other effect of converting preferred to common is that the taxpayers will end up owning what could be a controlling stake in several of the nation’s largest banks. The will leave the government with the dilemma of whether its wants to leave the firms alone or replace their boards and senior officers to monitor whether John Q. Public is getting a good return.
Douglas A. McIntyre
Is Your Money Earning the Best Possible Rate? (Sponsor)
Let’s face it: If your money is just sitting in a checking account, you’re losing value every single day. With most checking accounts offering little to no interest, the cash you worked so hard to save is gradually being eroded by inflation.
However, by moving that money into a high-yield savings account, you can put your cash to work, growing steadily with little to no effort on your part. In just a few clicks, you can set up a high-yield savings account and start earning interest immediately.
There are plenty of reputable banks and online platforms that offer competitive rates, and many of them come with zero fees and no minimum balance requirements. Click here to see if you’re earning the best possible rate on your money!
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
