Federal Reserve Appeals: Citigroup, Bank of America, and more

The Federal Reserve has received appeals from six of the 19 largest banks in the U.S. for more capital. Those banks include, Citigroup Inc. (NYSE:C) and Bank of America Corp. (NYSE:BAC), these are according to stress tests taken by the government.

Bloomberg have mentioned that some of these lenders will need extra cash from the government, but most of the capital will be coming from converting preferred shares to common equity. The Federal Reserve is now in the process of hearing appeals from these six banks.

The decision to push conversion instead of federal assistance means that the government can allow these banks to shore themselves up without the worry of political taint, which has certainly soured both Wall Street and Congress on the bailouts.

There is however, a certain amount of risk involved, such as diluting existing shareholders which the government action does not seem strong enough for.

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