Bank of America is looking at a shortfall in the billions of dollars, the paper said, citing people familiar with the situation. Both banks plan to rebut the preliminary findings, The Associated Press quoted the paper as saying.
Fed officials said Friday that all 19 banks that took "stress tests" will be required to keep an extra buffer of capital reserves beyond what is required now in case losses continue. That would mean some banks will have to raise additional cash. But the Fed stressed in a statement that a bank's need for more capital reserves to meet the requirements should not be considered a measure of the "current solvency or viability of the firm."
Federal Reserve officials held top-secret meetings with bank executives last week to give them preliminary findings of how each bank would fare if the recession got much worse. The government plans to announce the results of the tests May 4, and banks will have the opportunity to appeal the findings.By law, the banks cannot publicize the results without the government's permission.
The Treasury Department may become Citigroup’s biggest shareholder as soon as next month when the bank converts as much as $52 billion of preferred stock into common shares, Bloomberg said yesterday. The government may ask for the resignations of board members to show they’re accountable for net losses that totaled $27.7 billion last year, according to investors including Peter Sorrentino of Huntington Asset Advisors and William Smith of Smith Asset Management.