Bank of America Needs $34 Billion More: Report

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    NEWSLETTERS

    Bank of America may need up to $34 billion in extra capital to stay afloat.

    The results of a government stress test will not be kind to Bank of America, sources say. The bank will likely need another $34 billion worth of capital to stave off a budget shortfall, according the The New York Times.
     
    They’re not alone.

    Early estimates suggest that 10 of the 19 banks being stress-tested are expected to need a cash infusion. 

    Bank of America could raise the capital on its own by selling assets or stock, otherwise they will have to rely on government money. The company has already received $45 billion in capital from the government through the Troubled Asset Relief Program.

    With $79 billion invested in the company, the U.S. government would become the largest shareholder in the troubled lender.

    The bank’s chief administrative officer, J. Steele Alphin, told The Times that the company would have plenty of time to raise the capital, perhaps by selling its First Republic Bank Business or its China Construction Bank, before a government infusion is necessary. He also believes the $34 billion estimate is a bit high.

    "We're not happy about it because it's still a big number," Alphin said. "We think it should be a bit less at the end of the day."

    The government has been working on the stress tests for the past three months trying to determine if 19 of the country’s biggest banks are in a position to withstand further deterioration of the economy.

    Treasury officials plan to release the results of the tests Thursday. Most of the 19 banks involved in the stress test plan to hold press conferences on Friday to explain the results of the government’s assessments.