About the Wells Fargo profits and the stock market spike today-

[panader0]

Ed Schultz covered it a bit today. I guess Wells Fargo had a big first quarter profit and repaid some bailout money. Any smarter DUer's out there that can explain to me if this is significant?

[Balbus]

1. Wells Fargo didn't pay any bailout money back.

They still have it and never used it. They never needed it. They're just paying interest on it.

[leftofthedial]

4. Shultz had it WAY wrong.

You have it right.

[lonestarnot]

7. Not the first time he's had something way wrong. I don't think I'm going to like him on the TV.

[leftofthedial]

10. Between his relentless self-promotion, tendency to get things wrong,

and shallow blockheadedness, it's hard to keep focused on his apparently sincere support for working Americans.

[lonestarnot]

11. Agree!

[napoleon_in_rags]

2. I don't know, but I just left them.

After getting fees out the wazoo.

[Dover]

3. Well all bank balances will be looking better now...

as it seems they will be able to re-value their toxic assets. Don't know if this is
responsible for today's 1st quarter report.

-----------------------------------------


The more exotic the securities, the better?

New accounting rules announced Thursday may benefit Citigroup Inc., JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co., Bank of New York Mellon Corp. and State Street Corp., analysts said.

Smaller players, such as Zions Bancorp. in Salt Lake City, M&T Bank Corp. in Buffalo and Popular Inc. in Puerto Rico, will also be on analysts' radar screens.

The new rules "should have a very positive effect on their capital balances, that's for sure," said Robert Willens, head of the tax and accounting advisory firm Robert Willens LLC in New York.

Companies will "get to write up the carrying amount of their debt securities and in some cases equity securities, and that increase in value is credited to 'other comprehensive income' and eventually to shareholder equity."

What the banks all have in common: relatively high exposures to exotic, difficult-to-value assets that could be valued higher under the new rules announced by the Financial Accounting Standards Board.

By adjusting the rules on mark-to-market accounting and on accounting for other-than-temporary impairment charges, the FASB has given companies more flexibility to value assets when prices may not be accurately reflected in distressed markets.

Analysts said that taken together, the new rules are nearly certain to make banks appear healthier, to the extent banks actually act on them....>

http://www.americanbanker.com/article.html?id=200904020Y8ZN0DN&from=home&email=y

[Jeep789]

5. Balbus is right. Wells never was in the same kind of trouble

as the others. They were forced to take the bailout money because they bought Wachovia but they didn't even want it. Why they were forced to take it, I can't figure out.

[Mojorabbit]

8. I lifted this from a Mike Whitney article

posted here. I am barely keeping my eyes open and don't know where I saw it here on DU
but the title Light at the end of the Tunnel? Wrong! should come up in a search.

"Today five US banks according to data in the just-released Federal Office of Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activity, hold 96 per cent of all US bank derivatives positions in terms of nominal values, and an eye-popping 81 per cent of the total net credit risk exposure in event of default.

The five are, in declining order of importance: JPMorgan Chase which holds a staggering $88 trillion in derivatives (€66 trillion!). Morgan Chase is followed by Bank of America with $38 trillion in derivatives, and Citibank with $32 trillion. Number four in the derivatives sweepstakes is Goldman Sachs with a ‘mere’ $30 trillion in derivatives. Number five, the merged Wells Fargo-Wachovia Bank, drops dramatically in size to $5 trillion . Number six, Britain’s HSBC Bank USA has $3.7 trillion. ("Geithner’s ‘Dirty Little Secret’: The Entire Global Financial System is at Risk", F. William Engdahl, Global Research)

[Jeep789]

9. And much of that 5 trillion came from the acquisition of Wachovia nt

[cottonseed]

6. They can now value their crap as daisies.

M2M, and a big government backstop. Pretty simple business this multi-national banking. Wish I could get in on that action.

[NightWatcher]

12. I think this "mini bank bubble" is going to burst (see this story)

Fed Said to Order Banks to Stay Mum on ‘Stress Test’ Results
http://bloomberg.com/apps/news?pid=20601087&sid=aEX9sBcofMYY&refer=home

April 10 (Bloomberg) -- The U.S. Federal Reserve has told Goldman Sachs Group Inc., Citigroup Inc. and other banks to keep mum on the results of “stress tests” that will gauge their ability to weather the recession, people familiar with the matter said.

The Fed wants to ensure that the report cards don’t leak during earnings conference calls scheduled for this month. Such a scenario might push stock prices lower for banks perceived as weak and interfere with the government’s plan to release the results in an orderly fashion later this month.

(more at link)

IF they talk about how many are testing poorly, they know that the stocks would tank. So instead, deny reality and keep inflating a temporary bubble