Bank of America Corp (BAC)

[WID]

Some light at the end of the tunnel soon!
This is the good and safe way to help the banking industries. Read the article below:

WASHINGTON, Feb 22 (Reuters) - The U.S. Treasury on Sunday declined comment on reports that Citgroup (C.N) was in talks that could result in the government taking a 40 percent stake in the company, but the department said it was open to converting preferred shares into common equity to strengthen banks.

Treasury spokesman Isaac Baker said that under Treasury Secretary Timothy Geithner's bank stabilization plan, institutions can apply to convert preferred shares into convertible preferred shares and later into common equity as needed to strengthen their capital structure.

"We are open to considering a request to do so if the institution and its regulator believe it would promote the long term stability of that institution, and if we believe it's in the best interest of long term stability of our economy and financial system," he said in a statement.

Baker added that the Treasury has "made clear that we will do what is necessary to strengthen and stabilize the financial system so that it can provide the credit necessary to support economic recovery.

Under the Geithner plan, this includes making sure that there is capital where it is needed, and that public support can be replaced with private capital as soon as that becomes possible, he added.

Earlier, a source familiar with the situation told Reuters that talks were ongoing between Citigroup and regulators that could increase the U.S. government's stake in the once mighty banking giant.

The Wall Street Journal said this could result in a 40 percent common equity stake held by the government, but Citigroup officials were hoping for a stake of around 25 percent. (Click [ID:nHKG310337] for more details)

The lender is discussing with U.S. officials a scenario under which a substantial portion of the $45 billion in preferred shares already held by the U.S. government, amounting to a 7.8 percent stake in Citigroup, would convert into common stock, the Journal reported.

The plan would not cost further taxpayer money, but other Citi shareholders would see their stakes diluted and the government would have much larger influence over Citi.

The discussions reflect growing concerns that Citi and other big U.S. banks could be swamped by losses amid the housing crisis and swooning economy, the Journal said. (Reporting by David Lawder; Editing by Kim Coghill)

http://www.reuters.com/article/marketsNews/idINN2330108720090223?rpc=44