BofA Still Short Whopping $34B

Fed's findings mean government may end up as BofA's majority shareholder
By Rob Quinn,  Newser Staff
Posted May 6, 2009 1:30 AM CDT
The "stress test" results are likely to place more pressure on BofA CEO Ken Lewis, who was ousted as chairman last week.   (AP Photo/Mary Altaffer, file)
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(Newser) – Treasury Department officials have told Bank of America that it's nearly $34 billion in capital short of a passing grade on its "stress tests," sources tell Reuters. The amount is more than triple earlier estimate of BofA's capital needs, and may force the bank to convert the non-voting preferred shares it gave the government to common stock in return for assistance, effectively making the government its largest shareholder.

A Bank of America exec told the New York Times that other options remain for the bank to raise the capital on its own before it needs to take any action that would increase the government's stake in it. The official results of the stress tests on Bank of America and 18 others will be revealed tomorrow, and fears are mounting that they will show the strain on the system is worse than previously expected.