The resurrection of the American banking system must be complete. One of the weakest financial firms in the U.S., Bank of America (BAC), will raise $8 billion at $10 a share.
The stock closed the day at $11.25 and was down as much as 6 percent after hours. The money is in addition to capital it announced it would raise earlier in the month and that brings the total to $13.47 billion. B of A is in the process of closing the gap of $34 billion that the government said it needed after conducting its bank "stress tests."
Banks have been cashing in on the bank rally for weeks. Most recently, several financial firms that were told that they had failed the government stress tests said they would bring in new capital. Several others have said that they will bring in money to pay back TARP funds. The Treasury says it may not take the money back, leaving all involved with the uncomfortable fact that some US banks may actually be over-capitalized.
Bank of America is doing exactly what it should. Over the last three months, its shares are up over 200%. The company would be foolish not to take any money it can get and run.
The by-product of bringing in $8 billion is that it will probably secure the job of B of A CEO Ken Lewis. Investors have been calling for his dismissal since the company bought Merrill Lynch and posted huge losses in the last quarter of 2008. But the stock's price has made everything seem fine -- whether that is true or not -- including Lewis's mistakes.
This story was updated at 6:15 on May 20 when the news was announced.
Douglas A. McIntyre is an editor at 24/7 Wall St.