By MICHAEL GRAY

Banking analyst Paul Miller released a report stating that 14 of the 19 largest banks will need additional capital after Treasury releases the stress tests results late next week.

The test were originally scheduled to be released Monday, but according to sources within Treasury the banks are balking at Tim Geithner’s staff assessment of their balance sheets.

Additional capital raises by these banks will have to come from Uncle Sam, because to raise it privately would be too costly. Converting preferred shares into common would mean further nationalization for the likes of Bank of America and Citigroup.

Vikram Pandit and Ken Lewis are two CEOs who may be on the hot seat if Geithner lives up to his earlier promise of replacing bank leaders like he did with Chrysler.

I do not see this happening, it was just Geithner’s reply to claims he was being tougher on the auto industry, which was only seeking a fraction of what Wall St. needs just to keep the doors open on these banks.

Miller, with FBR Capital Markets, assumes that most of the banks will fall short of the required capital levels –– whether Tier 1 or Tangible Common Equity¬ –– to withstand a protracted recession. The Treasury’s best-case economic models for the stress test have no real GDP growth for the next 18 months.

These growth assumptions are far worse than the Obama administration is using for its budget projections, which shows plenty about where we are headed on budget deficits.

For more on Wall and Washingtonand the economy see: http://mgray12.wordpress.com