Family Life

05.11.09 | FL News Team

Four major U.S. banks are selling off some 6 billion dollars in common stock to try to raise capital and payback government loans. U.S. Bancorp is looking to sell 2.5 billion in stock and 1 billion in debt. Capital One has already sold more than 1.5 billion in stock, BB&T Corp is unloading 1.5 billion, and KeyCorp plans top sell 750 million.

The announcements come just four days after news that Wells Fargo and Morgan Stanley had sold a combined 12.6 billion in stock.Morgan Stanley also unloaded 4 billion in debt. 

All of the banks ditching stock were among the 19 that underwent recent government stress tests. U.S. Bancorp, Capital One, and BB&T were among the nine banks found to have sufficient capital to whether a lengthy economic downturn. KeyCorp, Wells Fargo, and Morgan Stanley were among the ten remaining banks ordered by regulators to raise a total of 74-point-six billion in additional capital. 

Banks are scrambling to raise capital after a boost in investor sentiment caused shares in the sector to more than double from lows seen in early March. Analyst Walter Todd with Greenwood Capital says the banks are "trying to get while the getting is good." He says the fundamentals of banks seem to be better than expected, but they still are not considered good because of underlying economic issues.''

Hundreds of lenders took money from the government's Troubled Asset Relief Program, or TARP, but many now view it as a thorn in their side because of the restrictions it puts on banks, like executive pay limits. They are also concerned that it makes them more desperate than they actually are for capital.