Again, I have been writing from the beginning, we cannot save all the banks. We cannot. We have sunk billions into Citibank and have been sinking the same into Bank of America. Now, we are all smart here and can smell the bulls*it, eventually the Obama Administration will have to cut the purse strings, which are our purse strings and let one of the big ones, that we were told, "CAN NOT FAIL", do just that. FAIL.
Bank of America Corp. stock rose in premarket trading after an initial decline, amid reports that it needs $34 billion in new capital.
The New York Times and The Wall Street Journal are reporting that regulators are telling the Charlotte, N.C.-based bank it needs about $34 billion in capital based on results of government "stress tests."
The New York Times quoted a bank executive, while the Journal report cited unnamed people familiar with the situation.
Bank of America was not immediately available to comment on the reports. The Treasury Department declined to comment.
Shares of Bank of America rose $1.02, or 9.4 percent, to $11.16 in premarket trading. The stock had been down more than 5 percent earlier in the morning.
Bank of America has been among the hardest hit banks by the credit crisis and ongoing recession. It has received more than $45 billion in government aid already, and has come under heavy scrutiny in recent months for its acquisition of Merrill Lynch.
The need for more capital comes as the government gets set to release the results of a stress test on Thursday that it completed on 19 banks to determine how they would fare in economic conditions worsened. The test aims to gauge how much of an additional capital cushion the nation's biggest banks need to protect against potential future losses.
Any of the banks that are deemed to need more capital will have an opportunity to raise the funds on their own before the government steps in to help support them.
Can BofA raise this capital? I don't know, this is not the only shaky bank out there and though the stock market is slowly becoming more solid, the job market is not and though the housing market is up it is only because many are purchasing drastically reduced homes. This also means that many Americans are sitting on mortgages in homes that have dropped drastically in value. Now 1 in 5 home owners owe more on mortgages than what the home is worth.
The downturn in home prices has left about 20% of U.S. homeowners owing more on a mortgage than their homes are worth, according to one new study, signaling additional challenges to the Obama administration's efforts to stabilize the housing market.
The increase in the number of such "underwater" borrowers comes amid signs that falling prices are making homes more affordable for first-time buyers and others who have been shut out of the housing market. But falling prices also make it more difficult for homeowners who get into financial trouble to refinance or sell their homes, and for others to take advantage of lower interest rates.
For instance, fewer will qualify to take advantage of a key component of the Obama administration's plan to stabilize the housing market. Under the plan, announced in February, as many as five million homeowners whose loans are owned or guaranteed by government-controlled mortgage giants Fannie Mae and Freddie Mac can refinance their mortgages, but only if the mortgage loan is a maximum of 105% of the home's value.
This leaves many STUCK with a mortgage on a home not worth, well, squat. So, now we should continue to keep the likes of Bank of American above water? Eventually, for the Obama Administration, people are going to get tired of this, if they are not getting ansy already.
WE CAN NOT SAVE THEM ALL. If we can let Chrysler go into bankruptcy, so can some of these banks. Like the automobile industry that drove themselves over a cliff, so did the greed of these banks.