That $34B Headline Number
Both the WSJ and NYT have front page news on newly leaked figures regarding Treasury’s stress test of Bank of America. Conveniently, their numbers match—$33.9B. Unfortunately, that’s about where the congruence ends.
WSJ:
Regulators have told Bank of America Corp. that the company needs to take steps to address a roughly $34 billion capital shortfall based on results of the government’s stress tests, according to people familiar with the situation. [Ed. Emphasis mine.]
NYT:
The government has told Bank of America it needs $33.9 billion in capital to withstand any worsening of the economic downturn, according to an executive at the bank. [Id.]
So which is it? Do they need $34B more or do they just need to reach $34B in tangible common equity? Perhaps I’m being unfair to the Grey Lady. It’s a bit ambiguous, but surely they mean an incremental $34B. Or do they?
NYT again:
The government’s determination that Bank of America doesn’t need as much capital as it has already received from taxpayers [Ed. $45B] is an indication that even some of the most troubled banks may not need more government money than has been allocated to them.
Oh. So the NYT would have us believe that this is good news. Hooray! For the avoidance of doubt, here’s the NYT one more time:
Mr. Alphin said since the government figure is less than the $45 billion provided to Bank of America, the bank will now start looking at ways of repaying the $11 billion difference over time to the government.
Mr. Alphin is is J. Steele Alphin, a BAC c-level exec.
I suspect this is garbarge reporting by the NYT, getting suckered by an executive snowjob. Incidentally, BAC is up 8% or so as of this writing, so at least the Times has company.
