Bank of America: Capital Raise or Not?

Aug 24, 2011
J. Webster
Comments Off on Bank of America: Capital Raise or Not?

Everyone and their mother now has something to say about Bank of America and their need to raise capital. Richard Bove said BofA has sufficient capital. Henry Blodget said they may be forced to raise as much as $200 billion. Yes, that’s billion. Bank of America then said those claims were exaggerated and unwarranted. Jim Cramer said Carlos Slim might come in and save the day in a Buffet like stock purchase or perhaps loan. There was even talk of JP Morgan merging with Bank of America in one gigantic too big to fail bank. That rumor was deemed baseless by BofA.

But the one person who might just have the most weight and respect, Meridith Whitney, also weighed in, and she said Bank of America has no urgent need to raise capital:

“I don’t think that there’s a mad dash to raise capital immediately,” Whitney said today in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “They’re going to steadily raise capital over time.”

After the stock hit a new 52 week low of $6.01 yesterday, the stock was up near $7 a share. Perhaps it was all short covering, but a nearly 10% one day move. The story’s not over though of course, tomorrow the stock could drop to a new low again. There’s just too much unknown right now and it might just take a savior like a Carlos Slim, or perhaps Superman, to change the story on BAC.

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