Meanwhile, the U.S. has invested huge amounts in Bank of America in various forms. The Treasury owns $45 billion of Bank of America preferred shares, the FDIC guaranteed $41.7 billion worth of debt that Bank of America sold, and the government guaranteed $118 billion of assets so it wouldn't back out of a deal to buy Merrill Lynch. But with stress test reports looming for May 4th, the U.S. is now talking about converting such preferred shares into common equity so that it can avoid asking Congress for more bank bailout money.

Would such a partial nationalization be good for Bank of America? Maybe. If the government converted its $45 billion in Bank of America preferred into common shares, then it would become by far the bank's largest shareholder, which would further dilute the holdings of all the other common shareholders. Such a conversion would also boost the bank's tangible common equity and cut back on the $700 million in preferred dividends it paid the Treasury -- although it would presumably keep paying some dividend on the new common shares.

Does this mean that Bank of America is out of the woods? It's too early to tell. It depends on whether it can keep posting big profits while limiting the costs of charging off bad loans. And those bad loans look mighty costly now since its credit-loss provisions more than doubled to $13.38 billion, its net charge-off rate rose to 2.85% from 1.25% a year earlier; its credit-card losses increased to 8.62% from 5.19% and its total nonperforming assets jumped to 2.65% from 0.9% in the prior year.

It will take several quarters of results before an answer becomes clear. But if Ken Lewis keeps beating expectations by 1000% as he did this quarter, his job will be less insecure.

Meanwhile, investors seem to be taking profits this morning -- the stock is down 7.7% in pre-market -- since its March 6th low the stock has risen 238% from $3.14 to $10.60 on Friday.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons From Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.