It looks like Bank of America will not be taken over by the government. The bank says it does not need any new capital despite prior rumors that it would need an additional $35B in government money… It will instead convert preferred stock to common, and liquidate assets amongst to other creative options to raise the capital necessary. This is boosting confidence in the market spurring positive trading in the financial sector. (ETF Daily News)
Bank of America (BAC) shares rose after reports that the company probably has enough government investment in hand to cover about $34 billion of capital needs prescribed by a recent stress test.
Those gains helped lift the Financial Select Sector SPDR (XLF), which tracks the financial stocks in the S&P 500, by 3.6%.
The KBW Banking ETF (KBE) rose 5.4% and the KBW Regional Bank ETF (KRE) rose 2.2%.