One of the big questions about Bank of America as it faces tough sledding from an earnings perspective is whether it will be forced to issue shares or sell assets to comply with Basel III.

CEO Brian Moynihan, on a conference call Wednesday with thousands of investors and analysts, ruled out both options. The mere prospect of such a massive offering was unsettling to investors, who understandably feared massive dilution. Bank of America now has more than 10 billion shares outstanding, compared with 4.5 billion in mid-2008, notes Reuters. But with a secondary offering off the table, what will the bank do?

We've been talking about the likelihood of selling or spinning off Merrill Lynch. But Moynihan also took that off the table in the conference call. He suggested that the bank would continue to sell non-core assets. It would help the bank's cause greatly, if he could get earnings heading north. Moynihan has said in the past the bank will grow earnings to ease capital requirements, but there's plenty of reason to be skeptical given the state of the industry, the economy, and looming liabilities related to MBSs.

One analyst has calculated that the bank could have to buy back about $62.2 billion of bad mortgages from investors, notes Reuters. That's about $44.4 billion more than the funds the bank has already set aside to cover the liability. So if the earnings hits keep coming and a capital shortfall looms, the bank may be forced to take a closer look at selling off a crown jewel. In any case, hat's off to Moynihan for making himself available to investors--many of them skeptics as well--at such a tough time.

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