Bank Of America In The News Again...

B of A (BAC) is in the news again, regarding the Fed's decision to not allow BAC to raise their dividends. Several other banks like Citi (C) and Wells Fargo (WFC) were allowed to return capital to shareholders in the form of higher dividends and share buy backs. This has spooked the street. Several stress tests were applied to the banks to make sure they have enough capital to comply with the new Basel III capital standards. Effective 2015 banks will be required to hold 6% tier 1 capital, to which that requirement will increase over time to 8.5% in 2019. While the street doesn't like the Fed's decision now. It's worth the wait, to allow BAC to increase their capital buffer. There will be plenty of capital to return to shareholders. Wallstreet analysts are collectively estimating that BAC will earn around 30 Billion through 2012. They will likely need 20-25 Billion to meet the Basel III requirements. That leaves 5-10 Billion in "excess" capital, that will be available to shareholders in the future. BAC is perceived as a weaker bank in light of the stress tests. That's providing a buying opportunity. BAC is down from $15 at the begining of the year. I have added to BAC today @ 13.38.