According to the Wall Street Journal, "Regulators have told Bank of America Corp. and Citigroup Inc. that the banks may need to raise more capital based on early results of the government's so-called stress tests of lenders, according to people familiar with the situation." The extra capital would be a "buffer" in case the banks' losses continue to grow. Apparently both banks are trying to develop arguments disputing the findings (for instance, BoA's shortfall is in the billions). The AP points out that, for the Treasury, "the easiest way to bolster bank balance sheets is to convert the government's existing stake from preferred shares — a form of debt — into common shares that carry voting rights." Last week, the federal government said capital needs weren't necessariy a measure of "current solvency or viability of the firm," but worries, coupled with swine flu concerns, have sent stock futures down. more ›

The Dow Jones, Nasdaq and S&P 500 all fell over 3% today, "ending at levels not seen since May 1997," according to CNBC (the Dow closed at 7,114 points). Many of the losses were related to concerns over how the tech sector will fare during the downturn. Some depressing quotes: UBS's Mike Ryan told Bloomberg News, "We’re still being governed by how deep the recession will be. There just don’t seem to be any clear signs that some of the problems have run their course," while Cantella and Co.'s Bradford Pine told CNBC, "You get this enthusiasm and then reality sets in. You keep hearing bits of news and you have hope, and then the air seems to let out and everybody loses confidence." On Wednesday, the government will start the "stress tests" to see if banks can weather another economic downturn. more ›