Well, I guess there was more to the stress tests than we all credited it with. News out tonight from the WSJ is that Bank of America needs a cool $35 billion.

Regulators have told Bank of America Corp. that the company needs to take steps to address a roughly $35 billion capital shortfall based on results of the government’s stress tests, according to people familiar with the situation.

The exact amount of the needed infusion couldn’t be determined late Tuesday, and Bank of America officials either declined to comment or couldn’t be reached.

Regulators began notifying the 19 financial companies subjected to the government tests of the results Tuesday.

An official announcement is expected after the close of U.S. stock-market trading Thursday.

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 amount of capital now needed by Bank of America could exceed what the bank can raise by selling assets or more shares to the public.

As a result, the bank may have no choice but to convert the government’s preferred shares into common stock.

That would boost the company’s capital to the level mandated by regulators but could also leave the U.S. government as one of Bank of America’s largest shareholder.

The article goes on to note that this is likely to be a test of the governments intentions with regard to existing management. They note that the acquisitions of Country Wide and Merrill likely spared the feds a couple of messy situations but that Ken Lewis has worn out his welcome. I think that you can probably interpret that as Ken Lewis has made some powerful enemies based on the testimony he gave to New York Attorney General Cuomo.

If BofA is this deep in the woods where does that leave Citi and a few other? It is beginning to look like things aren’t as rosy as a lot of us thought. It could be a rough road for the rest of the week.