So Bank of America is officially the most screwed up bank in America.  The stress tests say that they need to raise $34 billion.  A number of people are all-aflutter because they reckon that the stress test results are a radical understatement of how much capital behemoths like BofA and Citi actually need to make themselves robust to the new environment.  On the other hand, it's going to be hard enough for BofA to raise $34 billion--how many assets can they quickly dispose of at fire sale prices?  They're sure not going to the capital markets.  What's the point of setting the bar above "unreachably high"?

I'm sure I'm about the only one who feels sorry for Ken Lewis, but really.  He bought Merrill under the twin prods of Paulson's appeals to his patriotism, and the implied threat that banks who made the Treasury secretary unhappy would have a very hard time of things going forward.   Realistically, Ken Lewis didn't have much choice.  Now it turns out that in that one moment, he steered his bank from powerhouse to poorhouse.

Paulson may have been right that this was necessary to save the system.  If that's true, Bank of America shareholders are undoubtedly better off than they would have been in a more catastrophic collapse.  On the other hand, we can't see that other, terrible world, and in this one, the BofA shareholders have been handed an unfair share of the bill for averting an apocalypse that didn't quite happen.  I expect Ken Lewis will soon decide he needs to retire so he can spend more time with his family . . . complaining about getting fired.

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