Sure hope you weren’t shorting banks ahead of their quarterly reports. If you were, chances are you’re out on a ledge right now and not reading this anyway. So Wells Fargo did pretty well 1Q09, saying they’re anticipating a profit of $3b and that their Wachovia unit is “exceeding expectations” which might be good news or it might just mean that Wachovia hasn’t collapsed on itself like the house at the end of Poltergeist depending on where expectations were before.
Many an investor, hopefully not inspired by reading this site, had expected the rose-tinted glasses to come off once banks began releasing actual numbers for last quarter, because those numbers would be very small. Less than zero, even. But no, it turns out that three billion is significantly more than zero.
On one hand we’re relieved that we might be beginning to turn the corner, but on the other…man, Hank Paulson is going to gloat about this for years. He’s insufferable enough when he’s wrong, can you even imagine what he’s going to be like when he gets something right?
fonis // Apr 9, 2009 at 12:00 pm
could this have had anything to do with the mark to model/market change with the FASB?
diana prince // Apr 9, 2009 at 12:32 pm
um…maybe it’s because they stole all of our money and are lying about it AGAIN!? Hasn’t this been the plan all along? The TARPs, TARFs and other huge fail ideas were so they could fudge the books. Cuz we’re like total suckers and would never figure out what has been completely obvious for quite some time?!?
sry so serious
this is very depressing.
alyx // Apr 9, 2009 at 12:54 pm
Yeah, it’s good news if you’re Wells Fargo, less good news if you’re wondering how much of that $3bn you personally helped to bankroll.
Mr.Sparkle // Apr 9, 2009 at 12:55 pm
@fonis – this could have to do with:
A) the massive tax benefit from the WB acquisition.
B) the fantastic carry-trade of borrowing $ at 0% and lending it to taxpayers at 5%
C) charging fees as a result of activities in “B”.
D) Accounting funny bizness
E) All of the above.
Jason // Apr 9, 2009 at 12:57 pm
Hell, don’t ask me. I just report the news, I don’t understand it.
fonis // Apr 9, 2009 at 1:05 pm
I mean, I would just figure that since mark to model was just re-allowed for revaluation of assets, any (and all) banks will be reporting higher-than-expected profits since assets that would have otherwise been near 0 would now be … well… higher than 0.
So, @Mr.Sparkle, I guess this falls under D.
TheGryphon // Apr 9, 2009 at 4:08 pm
so, did WF’s business plan actually look like this?
1. Run bank badly, buy up well run small banks
2. Run them badly too
3. Receive tremendous Gov’t Bailout when TBTF
4. PROFIT!!!!!!
Tony // Apr 9, 2009 at 4:12 pm
This makes my brain hurt…
Jason // Apr 9, 2009 at 6:18 pm
Gryphon, WF didn’t want to take any of the TARP money – Paulson strongarmed the board’s chairman into accepting the cash. I don’t know that the bank was really doing all that badly, comparatively speaking.
Now, granted, today’s announcement was only of what to expect when the company files its quarterly report later, so there’s a lot of info that wasn’t provided and darker news may well be in their longer-term future, but for now I’m glad to see a bright piece of news from the banking sector. I remain convinced that a large part of this crisis is one of perception, so anything to improve that perception is going to be good for us all.
Weston // Apr 9, 2009 at 9:02 pm
I think WF is the one bank that didn’t run things poorly, hence us cock blocking Pandit for WB.
I still laugh when Pandit screamed “Pull their F***ing Lines!”
Wish i had the money to buy it when it was at 8.
TheGryphon // Apr 9, 2009 at 11:03 pm
It’s that “comparatively speaking” that gets to me. Compared to what? Citi? That’s a pretty low bar …
If your IQ is above 80, you can probably run your bank better than they did. WF reported a tentative profit, after taking a HUGE federal bailout, and after successfully lobbying for rules changes that let them report the value of their assets using a more favorable metric than the one they used last quarter. I should HOPE they don’t still have to report a loss after that!
Jason // Apr 9, 2009 at 11:25 pm
Compared to…there aren’t really that many entities anymore that you CAN compare it to. You’re down to four – or six, if you generously include MS and GS – banks of the size and breadth of WF after the mergers and failures of last fall. And two of those are failures of such a magnificent scale that it’s just not fair to lump WF in with them.