The losses at major banks recently have tended to be accompanied by announcements that the bank was going to seek fresh capital. This is sort of reasonable--the banks desperately need to relever--and sort of not, because right after you've announced that you took a bath on gigantic overinvestments in mortgage bonds is not really the best time to ask people for more money to lose on the market's next fur-bearing trout farm. I certainly wouldn't be rushing to hand over my hard-earned savings.

Turns out investors feel the same way I do.

Dozens of Wall Street firms and commercial banks have raised capital, and many more financial institutions are expected to follow the same path in coming months, particularly as regulators clamp down on these institutions to ensure they have adequate capital levels to withstand the credit crunch.

That is particularly the case for small, regional banks and mom-and-pop lenders just starting to be hit hard by losses in their real-estate and construction-loan portfolios. With so many banks already having gone hat in hand to shareholders, these financial institutions ultimately may be forced to deal with a limited pool of investors who still would be willing to pump in money.

Investors have good reason to be skittish. Most of the banks that issued new securities in recent months have continued to see their share prices slide, some by 40% or more. That means investors who bought into those transactions are far underwater. And existing investors who didn't bite have had their holdings diluted by the issuance of piles of new shares.

"Investors are tired of trying to catch a falling knife," says one investment banker who specializes in the financial-services industry.

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