Bank of America Corp. (BAC) and Citigroup Inc. (C) were told by federal regulators to raise more capital after government “stress tests” revealed that the banks were not adequately protected against additional deterioration in the economy, published reports said yesterday.

Officials insist that neither Bank of America nor Citigroup should be viewed as insolvent, but people familiar with the situation told The Wall Street Journal that the capital shortfall amounts to billions of dollars at BofA. It is not clear how much of a shortfall Citigroup faces.

Analysts anticipate that some regional banks also will be required to raise more capital.

Banks that need more capital will have six months to accumulate the additional infusions by selling assets, selling more shares, or converting preferred government shares into common stock. If they are unable to build their capital through public and private sectors, the banks may again dip into taxpayer-funded government coffers.

Bank of America

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Yes, he can!…or so he thinks…politics is a dirty job, but someone’s got to do it…We don’t often have the chance to stand up for Dubya, but give the guy a break…he doesn’t understand the economy enough to be held responsible for the financial collapse…Bankers lend money when they think they can make money at it…Friedman offers Obama some advice…and more!

Tomorrow, the man called Obama takes up the president’s job. Poor man. He seems like a decent sort. A shame…something like that happening to him.

But he hung around with the wrong crowd - lowbred types in high political circles - and look where it has gotten him. Tomorrow, he’ll be called upon to stand before a hundred million viewers, put his hand on a Bible, and lie.

To the question - will he swear to uphold the Constitution of the United States America - he will give the answer he has

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President-elect Barack Obama yesterday (Monday) formally unveiled his economic team, including the nomination of New York Federal Reserve Bank President Timothy F. Geithner as the new administration’s U.S. Treasury secretary. The team’s first challenge will be assembling an economic stimulus package that could be even larger than the $700 billion Troubled Asset Relief Program (TARP) the Bush Administration has deployed.

The nomination of Geithner to succeed current U.S. Treasury Secretary Henry M. Paulson Jr. was leaked over the weekend, and was reported by Money Morning yesterday.

Geithner (pronounced: GITE-ner) obtained a Master of Arts degree in International Economics and East Asian Studies from Johns Hopkins University’s School of Advanced International Studies in 1985. He also has studied Japanese and Chinese and has lived in present-day Zimbabwe, India, Thailand and China.

As

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$5 trillion. That’s how much it has cost so far to bailout out corporate America from its own stupidity, greed and corruption (yes, Fannie and Freddie, that means you). Or to put it another way, the US government in its eternal wisdom has now put the American taxpayer on the hook for $5,000,000,000,000.

- Here’s the breakdown, from CreditSights, a research firm in New York and London, as reported in Forbes magazine.

The Fed

$1 trillion in overnight or short-term loans since March to primary dealers through its emergency discount window* $1.8 trillion in loans to primary dealers through the Fed’s term auction facility since in January* $29 billion in Bear Stearns debt $60 billion of credit available to American International Group $22.5 billion to set up a special purpose vehicle to manage some of AIG’s residential mortgage-backed securities $30 billion of a second fund to hold $70 ...

The U.S. isn’t the only country rolling back on free-market principles. Communist China is also busy bailing out its economy. Over the weekend, the People’s Republic announced a $586 billion ’stimulus’ plan of it own. U.S stock futures are up on the news.

- Italy may be the next country to ‘rescue’ its economy with taxpayers’ money. According the The Times the Italian government was working on plans over the weekend to pump as much as $26 billion into its biggest banks.

- Uncle Sam is about to bailout AIG from its bailout. Apparently, the original handout was too tough on poor old AIG. So now its going to get a sweeter deal. This from the WSJ:

The U.S. government reached a deal Sunday night to scrap its original $123 billion bailout of American International Group Inc. and replace it with a new $150

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Money Morning/The Money Map Report Where to start?  Market volatility is sure to continue for the indefinite future as investors, economists, analysts and politicos debate the merits of the federal government’s ongoing move – and try to make heads or tails out of the new financial landscape. Mega-financials that offer everything (deposits, lending, brokerage services, deal underwriting, wealth management, mergers & acquisitions deals) appear to be the wave of the future (is beleaguered Citigroup Inc. (C) suddenly ahead of its time?). Comparisons to past crises are emerging: The Great Depression, the savings & loan crisis, the junk bond collapse, Japan’s stock-and-real-estate implosion, and even Tulip Mania). Many investors have thrown in the towel (capitulation) and unloaded any and all financials (not to mention autos, airlines, and even technology stocks…anyone catch the 25,000 jobs lost at Hewlett-Packard Co. (HPQ) or ...