WFB may need $50 Billion

It was only a couple days ago the stock market shot up after Wells Fargo announced $3 Billion in profits. It was such good news it seemed too good to be true.

Now, just a few days later, the news was indeed too good to be true.

KBW expects $120 billion of “stress” losses at Wells Fargo, assuming the recession continues through the first quarter of 2010 and unemployment reaches 12 percent, Cannon wrote today in a report. The San Francisco-based bank may need to raise $25 billion on top of the $25 billion it owes the U.S. Treasury for the industry bailout plan, he wrote.
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Wells Fargo raised its provision for loan losses by $4.6 billion in the quarter, below Cannon’s estimate of $5.4 billion. FBR Capital Markets analyst Paul Miller wrote after the announcement last week that he expected a $6.25 billion increase.

Net charge-offs were $3.3 billion in the quarter, compared with $2.8 billion in the previous period at Wells Fargo and $3.3 billion at Wachovia. The current numbers are artificially low because consumers received tax refunds and a there was a moratorium on some mortgage defaults, wrote Cannon, who predicts a “re-acceleration” of charge-offs in the second quarter.

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Welcome to the fictional profit statement

to match the fictional press release and the fictional news conference.

What I find amazing is the stocks are going up on this news, so how is this different from hyping up a dot con stock in the 90's?

Even more interesting is any inside trading deals going on before these "profits" are announced?

I feel like my financial future is on a joy ride on a global roulette wheel.

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Now that mark to market is

Now that mark to market is being tabled, a whole list of
GAAP steps can now come back into play.

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This explains why Goldman Sachs became a bank

FDIC exercises some ratings arbitrage and Goldman Sachs issues $28 billion in FDIC guaranteed debt possibly more in the future. This might be the real reason they became a depository bank. GS debt gets AAA rating.

Could they survive w/out this subsidy?

U.S Program Lends a Hand to Banks, Quietly

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