Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.

Stress test results are starting to leak:

Regulators have told Bank of America Corp. and Citigroup Inc. that the banks may need to raise more capital based on early results of the government’s so-called stress tests of lenders, according to people familiar with the situation.

….Bank of America’s capital hole as measured by the regulators is in the billions, said people close to the company….It isn’t clear how big a capital deficit Citigroup faces.

Well, I’ll bet that Citi’s capital requirements are “in the billions” too.  What else would they be in, after all?

In any case, there’s no way that either bank can raise private capital, and the Treasury has stated flatly that it won’t allow them to fail.  That means either another big capital injection from the feds or else some kind of guarantee to private investors.  The former would almost certainly have to be at market rates (I doubt there’s any appetite for more sweetheart deals) and the latter would be such a thin veneer that it’s almost certainly impossible to pull off.  Especially in the case of Citi, then, it’s hard to see how the government ends up anything other than a majority owner of the bank once this is all over.  Tim Geithner can call this anything he wants, but that’s nationalization whether he likes it or not.

FOLLOW THE MONEY

Corporations and billionaires don’t fund journalism like ours that exists to shake things up. Instead, support from readers allows Mother Jones to call it like it is without fear, favor, or false equivalence.

And right now, a longtime friend of Mother Jones has pledged an incredibly generous gift to inspire—and double—giving from online readers. That's huge! Because you can see that our fall fundraising drive is well behind the $325,000 we need to raise. So if you agree that in-depth, fiercely independent journalism matters right now, please support our work and help us raise the money it takes to keep Mother Jones charging hard. Your gift, and all online donations up to $94,000 total, will be matched and go twice as far—but only until the November 9 deadline.

$400,000 to go: Please help us pick up the pace!

payment methods

FOLLOW THE MONEY

Corporations and billionaires don’t fund journalism like ours that exists to shake things up. Instead, support from readers allows Mother Jones to call it like it is without fear, favor, or false equivalence.

And right now, a longtime friend of Mother Jones has pledged an incredibly generous gift to inspire—and double—giving from online readers. That's huge! Because you can see that our fall fundraising drive is well behind the $325,000 we need to raise. So if you agree that in-depth, fiercely independent journalism matters right now, please support our work and help us raise the money it takes to keep Mother Jones charging hard. Your gift, and all online donations up $94,000 total, will be matched and go twice as far—but only until the November 9 deadline.

$400,000 to go: Please help us pick up the pace!

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate