After easily passing the Federal Reserve's stress tests last month, Bank of America announced today it made a mistake in calculating some of the key capital levels it submitted.
That announcement prompted the Fed this morning to require the megabank to resubmit its capital plan and to suspend its dividend and buyback programs until the new capital plan is approved.
What this means
Shareholders will likely get less than what Bank of America had previously promised. It also serves as a blow to the company, whose shares dropped about 5 percent in morning trading.
Bank of America had previously announced it was approved to do $4 billion in buybacks and to raise its stock dividend from 1 cent per share to 5 cents per share. The company said it will "expeditiously resubmit" its capital plan but warned in a press release that it expects the new requested capital actions will be less than what it had previously announced.
The company said it overstated its capital amounts and ratios due to an "incorrect adjustment related to the treatment of certain structured notes assumed in the Merrill Lynch & Co. Inc. acquisition in 2009."
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