If Bank of America (BAC) were forced to raise capital in a hurry, it would consider selling its Texas retail branches and private-wealth bank U.S. Trust, a document obtained by the Wall Street Journal said. The document was provided to U.S. regulators who are conducting stress tests on the biggest banks in the country; the Federal Reserve has been demanding that banks let them know what they would do if they faced a severe market shock.
Bank of America has also told regulators that if its capital position deteriorated enough it would consider issuing shares whose value would be tied to the performance of its Merrill Lynch unit.
Bank of America has no imminent plans to sell the retail chains or U.S. Trust, the Journal noted. And most analysts have expressed confidence that BAC and its fellow big banks will pass the Fed’s stress tests. In fact, some expect the banks’ stocks to get a significant boost once the results of the stress tests are made public.
And forcing banks to detail their worst-case-scenario plans gives some credence to the notion that the government no longer considers the banks “too big to fail.” Of course, if the banks were in mortal danger, many observers doubt the government would sit on its hands.
