Does B of A Really Need New Capital?

Even the WSJ seems to be sending a misleading message on this one. With the rumors of the idiotic "stress test" results showing B of A requiring additional capital, the WSJ says the following:

At Bank of America, the government's findings are likely to set off a scramble over how to fill the capital hole at the nation's largest bank in assets.

The Charlotte, N.C., bank already has received $45 billion in capital from the federal government, some of it to help the bank cover losses stemming from its purchase of securities firm Merrill Lynch & Co. in January.

The WSJ says that this $45 billion is capital and implies it needs more capital when the government is now basically saying that the $45 billion was actually not "capital" but debt. The government's proposal now is to take a huge ownership in B of A by converting this $45 billion into regulatory capital. Note that they would not be giving B of A one additional cent. But Obama will get his wish - control of the two largest financial institutions in the country.

From the Godfather-esque "you have an offer you can't refuse" with the initial TARP funds to the forcing of the Merrill deal to this, we are getting a sense of the Chavez-like strong hand of government.