Meredith Whitney, analyst at CIBC, is not backing off from her bearish stance on Citigroup. In fact, her bearishness now extends to other big banks, notably Wachovia. Her main concern is capital, and whether banks have enough. The Financial Times' Alphaville does us all a favor by explaining how rating agency downgrades of CDOs and subprime-backed assets can lead to higher capital requirements. These assets carry risk weightings. AAA and AA get 20 percent assignment. BBB gets a 100 percent weighting. So an AAA rated security worth $1 billion would require $200 million in capital. Downgrading that asset to BBB, the capital requirement moves up to par value, $1 billion. Ouch. Basel II apparently imposes tougher standards.  

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