BofA needs 34bn$

Somebody please help me understanding this: BofA, capitalization 74bn$, needs to raise 34bn$ because it is apparently failing the requirements of the stress test. This would probably mean a diluiting of 50%. Yet the stock is up 7%. Below from Yahoo! finance: NEW YORK (AP) — Bank of America Corp. stock rose as investors appeared comforted by reports that the bank has the means to cover a potential $34 billion...

Bank of America 10bn$ capital raise

How on earth a bank that spends 50bn$ to buy Merrill Lynch would after a month need to raise 10bn$ at a discount of some 20/30% versus market price, diluting existing shareholders, in a market that is extremely tight on cash? It seems to me that some people might not have understood how serious the situation is, if they think they can go shopping and later easily present the bill to shareholders.

Lehman and Merrill

OK – this is old now. I wrote it early this morning, and the world changed egain, but hey! Why should I not post it? ____________________________________________________________________________________ At the end, it did happen. A “major” financial institution has gone bust. So the FED has sort of “saved the face” with regard to Moral Hazard. Merrill would have probably been next...