It's not good news that Bank of America (BAC) and Citigroup (C) have been told to raise more capital following the completion of the Fed's stress tests. The thing is, the stress test isn't even that stressful, so if they're being told to raise more cash under this scenario, how much more would they need under realistic worse-case conditions?
But the defenders are all out with the same line: Well, gee, everyone knew they needed more cash, how can this be a surprise to anyone?
The big problem with that reasoning is that shares of Bank of America and Citi are both off today. So it's kind of hard to be arguing that the news was already priced in when the news is moving the shares so much.
And there's the problem of the banks denying the stress test's conclusions and filing an appeal. So it's as though everyone knew they needed more capital - everyone except shareholders and banking CEOs.