Citi didn't predict that it would fail the stress tests for being bad at predicting bad news.

So ... y'know. This is a good, and sort of stressful, Financial Times story about Citi's surprise and disappointment at flunking the CCAR stress tests for "qualitative" and sort of existential reasons:

The Fed is indicating “it’s too early, we aren’t satisfied that this company is in the final form it needs to be in. Why are you returning capital when you need it?” said a person familiar with Citi, who added that the Fed may want Citi to shave off more of its businesses.

How's Bank of America doing with its mortgage lawsuits?

Remember yesterday when Bank of America settled its Fannie Mae and Freddie Mac mortgage lawsuits for $9.3-ish billion? And how Bank of America had settled another Fannie Mae mortgage lawsuit for $10.3 billion last year? How many more government lawsuits against Bank of America over mortgages are left? A certain number:

A federal magistrate judge on Thursday moved to toss out a Justice Department lawsuit over a soured mortgage deal at Bank of America, dealing a potential setback to the government’s pursuit of Wall Street misdeeds. ... The government’s case sought to punish Bank of America for its sale of mortgage-backed securities to investors, including the Federal Home Loan Bank of San Francisco, which has a loose affiliation with the government.

If you keep track of these lawsuits based on their dumb e-mails -- and why wouldn't you? -- this is the "fat kid in dodgeball" one.

SAC is sorry.

"Even one person crossing the line into illegal behavior is unacceptable," the artist formerly known as SAC Capital said in a letter asking a judge to accept its plea agreement on insider trading charges, and, um, it was more than one! It was a lot. But if an entity like SAC can be guilty of insider trading, I suppose it can also have emotions, and this one does: "The defendants are deeply remorseful for the misconduct of each of the individuals who broke the law while employed by them."

The Subsidy Reserve Plan.

There is apparently proposed legislation that "would require banks over $500 billion in assets to identify on their balance sheets the portion of retained earnings that is attributable to the subsidy they receive for being" too big to fail, and then not count those earnings for Basel capital purposes. I do not think it's as easy as all that -- the bid/ask on that calculation is all over the place, and some banks think the subsidy is negative -- but it's sort of an amusing idea. And a dead one: "A staffer for a leading Democrat confided that since H.R. 2266 is a moderate, nonpartisan bill, it does not motivate anyone to co-sponsor it."

"German Banks Oppose Including Legal Costs in Stress Tests."

Oh? "Stressing of legal risks is problematic in principle because it implies using sweeping assumptions," says the head of the trade association, and I guess I don't really understand that as an objection to a stress test methodology? It's pretty much all sweeping assumptions. One pretty good assumption, though, is that in the next crisis, banks are gonna get sued.

How Hitler-like is too Hitler-like?

I forgot it in yesterday's linkwrap, but this Financial Times article about "Leading Britons' business links with Russians under spotlight" is too amazing to let it go. Here is pretty much a warm-up quote:

Lord Skidelsky said he would keep his directorship with Rusnano Capital, a subsidiary of Russia’s state nanotechnology champion, unless Mr Putin started acting “more like Hitler”.

That's four paragraphs in; it gets even goofier. (Via.)

Things happen.

M&A bankers and lawyers tell war stories. "You're darn right we should innovate," says CEO. Lehman Brothers found some more money. Profits are too high, says the Wall Street Journal. A lot of shareholder proposals are dumb. Corporate Twitter fights are even dumber. Someone else is suing Phil Falcone. Dan Loeb's swimming pool is too warm.

Interview with a Rap Genius.

"This is the most important business interview of our modern age," says Sam Biddle at Valleywag, and who am I to disagree?

To contact the writer of this article: Matt Levine at mlevine51@bloomberg.net.

To contact the editor responsible for this article: Tobin Harshaw at tharshaw@bloomberg.net.