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Halftime: Fed Denies Bank of America Its Dividend Plan

The Federal Reserve objected to Bank of America's plans to boost its dividend and told the financial institution to revise its proposal.

The largest U.S. bank by assets said it intends to submit a revised proposal to the Fed and still hopes to increase its dividend in the second half of the year. CNBC's Melissa Lee said the developments highlights BofA's weak capital position.

On Friday, the Fed approved dividend increases for a group of banks after having conducted a second round of stress tests on the U.S.'s 19 largest financial institutions. Kanundrum Capital founder Brian Kelly was quick to sell the news and remains short financials via the Financial Select Sector SPRD exchange-traded fund.

"When you look at the financials and particularly Bank of America, they don't have the capital there. Then you have to question going forward, where's their earnings going to come from?" Kelly said. "We know we have a steep yield curve now, but that's starting to come in. So for me, I am a short-seller of the financials for a while."

Meanwhile, Steve Grasso of Stuart Frankel has sold two-thirds of his position in Citigroup . Grasso noted he sold Citi on the 1-for-10 reverse stock split, which the New York City-based bank announced on Monday. He said this is a short-term trade, though. The "Fast Money" trader plans to buy C shares back on momentum.

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CALL OF THE DAY: AOL

Claiming AOL is back from the brink, UBS has turned bullish on the Internet giant and increased its rating to 'buy'. Let's get to the analyst who made that call.

So why the change of heart? To find out, "Fast Money" spoke with the analyst who made the call. Watch the video to see the full conversation with UBS analyst Brian Pitz.

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TRADING EGYPT

For a check on the Egyptian market, Morningstar EFT strategist John Gabriel appeared on Tuesday's program. Check out the complete conversation by watching the video.

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Trader disclosure: On Mar. 23, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; JJ Kinahan is Long (AA), (C), (F), (CCJ), (GE), (MSFT), (WAG), (TBT) and (MOS). JJ Kinahan is short (XHB) and (SPY).

Comcast Is The Parent Company Of CNBC
Comcast Is The Parent Company Of NBCUniversal
GE Owns 49% Of NBCUniversal
GE Owns 49% Of CNBC

BRIAN KELLY
Accounts Managed By Kelly Are Long (GLD)
Accounts Managed By Kelly Are Long (SLV)
Accounts Managed By Kelly Are Long (EBAY)
Accounts Managed By Kelly Are Long (PGH)
Accounts Managed By Kelly Are Long (VLO)
Accounts Managed By Kelly Are Long (TLT)
Accounts Managed By Kelly Are Long (DBA)
Accounts Managed By Kelly Are Long Corn
Accounts Managed By Kelly Are Long Wheat
Accounts Managed By Kelly Are Long Soybeans
Accounts Managed By Kelly Are Long (NFLX) Puts
Accounts Managed By Kelly Are Short (XLF)
Accounts Managed By Kelly Are Short (IXG)
Accounts Managed By Kelly Are Short Copper
Accounts Managed By Kelly Are Short (FCX)
Accounts Managed By Kelly Are Short (CRM)
Accounts Managed By Kelly Are Short (IBM)

PATTY EDWARDS
Edwards is Long (AAPL) for clients
Edwards is Long (AMZN) for clients
Edwards is Long (CCL) for clients
Edwards is Long (GIS) for clients
Edwards is Long (ORCL) for clients
Edwards is Long (MSFT) for clients
Edwards is Long (VZ) for clients
Edwards is Long (AZO) for clients

STEVEN GRASSO
Stuart Frankel & Co and it’s partners own (CSCO)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MSFT)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners own (UAL)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners are Short (QQQQ)
Stuart Frankel & Co and it’s partners are Short (AAPL)

CNBC.com with wires. Reuters contributed to this report.

Symbol
Price
 
Change
%Change
AOL
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BAC
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C
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SPDR FIN SEL
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