Banks Continue To Raise Capital

As was suspected back in late March, Goldman Sachs sold $1.9 billion of its stake in the Industrial and Commerical Bank of China in order to boost capital reserves and prepare to pay back the TARP.

The ability to raise capital by the banks has been incredible in such a short amount of time especially since the results of the stress tests were released. Reuters has the rundown of the banks who announced $18 billion in capital raises just today!

While the idea of finally paying back the TARP is great news for the taxpayer, there are two other risks in the short term.

1) I believe the Treasury still plans to take the TARP money back from the major financials but then lend it out again to other firms still in need! Hopefully the new firms will also pay it back in a timely fashion.

2) The extreme dilution is pressuring financial shares right now, just imagine if financials were still rocketing higher with the rest of the market...