Don't Be This Family

Major U.S. financial institutions like Citigroup (C, Fortune 500) and Merrill Lynch (MER, Fortune 500) have taken drastic steps lately in an effort to raise capital after writing down billions of dollars on the value of mortgage-backed securities.

Earlier this month, the two companies sold stakes to foreign, state-run investment funds in exchange for capital infusions. Citigroup went one step further by slashing its quarterly dividend, making it the latest in a series of banks to do so.

Moreover, there's no indication that a one-time capital infusion would rescue these troubled firms. If the housing market worsens, argues Donald Light, senior analyst at independent research and consulting firm Celent, these bond insurers could require more capital.

"The solution for now is not a solution for the next 24 months," said Light. read more