A few weeks ago, Lewis stated, Bank of America doesn’t need any new capital but that government regulators will determine in the end which banks need additional capital.

It turns out, Bank of America didn’t need any new capital since their tier 1 ratio was high enough but the government did dictate they needed more of that capital to be in the form of common equity.

BAC could have required no additional capital if they simply converted the government preferred shares but they realize given all of the government interference, it’s better to simply pay off the TARP preferred shares and raise the capital in the private markets and by selling some non core assets.

BAC just raised 3 billion in private debt and expect them to pay back about 25+ billion in TARP funds in the next 6 months.

They have already stated that they no longer want the government to 90% guarantee 118 billion of assets in return for what amounts to a 14 to 24 billion deductible. This supposed great government guarantee wasn’t favorable to BAC.

Taxpayers will end up making a very nice profit in terms of preferred dividends and warrants on their investment in Bank of America so I don’t know why a company that cleaned up the Countrywide mess and will help out Merrill Lynch has been vilified in the press. It’s a joke.