Wells Fargo has also flunked the stress test and will requires about $15 billion in new capital, Bloomberg is reporting. Of course, no one can really flunk the stress tests. And if Bank of America’s shares are any sign, shares of Wells Fargo should soar on the news.
You see, by the same magical maths Bank of America is using, Wells Fargo can convert existing government preferred shares to create the new capital. Since Wells Fargo received $25 billion in taxpayer funds last year, it actually has a $10 billion capital surplus!