There's a lot riding on the upcoming stress tests, and if the move by Citi to approach the government about taking a large stake in the bank is any indication, we can expect some banks to fare poorly. Which will certainly prod the government into more direct intervention.

For now, Obama Administration officials are sticking to their PR mantra that they don't want to get in the business of running large banks, essentially turning them into financial utilities. But they are hedging their words carefully, acknowledging that the tests, which were to start today, will determine "what type of additional capital investments the government may need to make," said Sheila Bair, of the FDIC to the AP. Bank of America CEO Ken Lewis is trying to make the case that his bank doesn't need another massive injection of taxpayer funds, but there are plenty of skeptics.

For more:
- here's the AP article

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