Yes, 600 mid-sized banks would fail the stress test!  That's a lot of banks.  And the biggest problem is commercial real estate... which is the next piece of the bailout puzzle.  How long are we going to throw money at these black holes?  The most inefficient parts of our economy?  Why don't we let it get worse on its own before it gets better... let the free market work itself out.

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Bank of America has been one of the hardest hit banks during the credit crisis and recession.  And Ken Lewis should be the banking CEO that gets hit the hardest (in the face), but no on is stepping up to the plate... investors did split his title... he is now only CEO instead of Chairman and CEO.  Way to go.

B of A has received more than $45 billion in government aid already and the stress test revealed that they may need to raise as much as $34 billion more.  The bank will have the chance to raise the capital on its own before going to the government again, but coming up with $34 billion from private investors is no easy task.

Bank of America could also shed assets if needed, such as a portion of its stake in China Construction Bank. A lockup provision expires tomorrow that would allow Bank of America to sell about a third of its stake and hopefully fetch around $8 billion.  They'll probably sell it back to China... they pretty much own everything anyway.

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At least 6 of the 19 largest banks have failed the stress test, including Bank of America and Citibank.  

This is a test to find out if the banks have enough capital for some worst case scenario financial situations.  And now they're all appealing... how can you appeal the fact that your bank sucks?  This makes zero sense.  I've sucked on a lot of tests and have never had the option to appeal.  Give me a break.

The government wants these banks to raise capital by converting preferred shares to common shares, which would hold off the need for capital injection.  I'd stay away from the banks.  This market rally is starting to look even more fairy tale-like.

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All of the big banks are starting to show positive earnings and the future looks bright but can we trust the numbers?  The new stress test for banks that Tim Geithner has come up with is being called "A complete sham" by a formal bank regulator and "asinine" by the Chairman of Wells Fargo. 

Here's how it works for those of you who may not know...

The stress tests are to be finished no later than the end of April. They will evaluate the financial position of banks against two different scenarios, a baseline scenario consistent with consensus economic projections by several "forecasters", and a "more adverse scenario" that sees unemployment rising above 10 percent in 2010, and home prices falling another 22 percent in 2009.  The second scenarios seems much more plausible to me.  Keep in mind these are much of the same people that didn't have a clue we were getting into this mess.  And it goes on...

If a bank is deemed "under-capitalized" it will then have six months in to raise private capital before it must receive government aid.  If it needs the government aid, then convertible preferred secretaries will be provided that can be converted into common stock as needed.  How convenient!  More government aid.  Basically pulling money out of thin air.  Watch out inflation! 

And this is how Timmy is trying to instill confidence in the banks.  A little late maybe?

 How are we now just coming up with a test to determine the "health" of our nations banks.  Shouldn't this have been something in place like a million years ago so we could have seen the shady practices happening before they were to large to fix?  So the question is: are the banks really making any money or is this just more tricky accounting? 

Check out some more info below.  Or ask questions here.

Check out the full article.  Article 2.