The Financial Times reports than both Bank of America and Citigroup are working on plans to raise up to $10 billion more in capital. That is the amount the so-called stress tests have determined they need to stay solvent if the recession worsens. Citigroup is said to be working out a plan that would convert more than $15 billion in trust preferred shares into common. That would allow for more capital without requiring the government to raise its stake beyond 36 percent, which it will own if the planned exchange offers go through. We may also see asset sales.

As for Bank of America, it seems likely that some sort of exchange offer would be required. Wells Fargo and PNC Financial reportedly also will require an injection of new capital. Details are scheduled to be released May 7. Meanwhile, Warren Buffett has attacked the stress tests.   

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