Why are BofA and Citi considerd at risk?
According to the Wall Street Journal, the results of bank stress tests have compelled regulators to inform Citigroup and Bank of America that they need to raise more capital. At Bank of America, the capital shortfall is in the billions. As a result of the widely publicized report, shares of both stocks fell during morning trading activity. Bank of America shares fell 6% while shares of Citi fell 5%. The bank stress tests were conducted on 19 of the largest banks in America, with the goal being to determine a) which banks were in a position to deal with a future financial shock; and b) which banks were in need of further government support. Banks have been stress-tested based on estimates of a national unemployment rate at 8.8 percent as well as less optimistic estimates of 10.3 percent. According to a report at CNNMoney.com, Citi and Bank of America are expected to object to the purported results of the bank stress tests with “detailed r
