One day before the official announcement of the bank stress test, there are always leaks out to the public about the results. Here’s what the unofficial results are so far.
Banks that won’t be needing capital
- American Express Co.
- JPMorgan Chase & Co.
- Bank of New York Mellon Corp.
Banks that will need capital
- Bank of America
- Citigroup
- Wells Fargo
In addition, BofA will need as much as $34 billion dollars of capital but nevermind because all the bank stocks are up on the news (in fact, the banks that need capital are going up higher than the ones that don’t need it).
Why? Because sources say that the banks will have no problem coming up with the capital. In additon, the banks won’t have to covert preferred shares into common unless the economy really tanks and the writedowns are actually necessary (currently, the extra capital is for the “just in case” scenario).
Obviously, this is great news and pretty much kills all the short sellers who are shorting the financial institutions going into the stress test because they think bad news will come.
I personally think there are tons more writedowns to come, but in the meantime, bears beware.