Raise Capital in 30 Days Or Fire Your CEO: Treasury

This is what happens when government gets involved with "free" enterprise. Raise capital privately or we are going to make you fire your CEOs. It is not the business of government to select the CEOs of companies, it's the Board of Directors who decide. The "stress" test for banks was purely for public consumption and in no way actually reveals the financial status of the banks. The government used rosy economic assumptions such as unemployment reaching 10%. It as already over 15% according to shadowstatistics.com and most likely going to 20%.-Lou

Half of large banks told to raise $75B

The federal government Thursday gave 10 of the nation's largest banks six months to raise about $75 billion in funds to cushion against burgeoning losses as the recession and unemployment push more people into default on their loans.

As expected, under stress tests completed by the government, Bank of America and Wells Fargo were given the biggest burden of raising $34 billion and $14 billion respectively to ensure the banks can withstand expected losses on mortgages, credit cards and business loans in the next two years. Citibank, which already has been working furiously to downsize and shore up its balance sheet, must raise another $5.5 billion.
GMAC, which is General Motors' financing arm, must raise $11.5 billion, while Morgan Stanley must raise $1.8 billion and Fifth Third must raise $1.1 billion. Nine of the 19 largest banks had enough capital and will not be required to raise funds.

The government is pushing the banks to use all means possible to raise the money through private markets rather than drawing from the government's dwindling bank bailout fund. Options for the banks include issuing stock, selling nonbanking assets and converting preferred shares into common stock, which is the form of capital favored by the government and investors.

Another measure aimed at discouraging banks from seeking government assistance is a veiled threat of ousting a bank's managers if they ask the Treasury to convert preferred shares the Treasury obtained last fall into common stock to an extent that the Treasury ends up taking majority ownership of the bank.

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http://www.washingtontimes.com/news/2009/may/08/half-of-large-banks-told-to-raise-75-billion/