How To Make Money Without Really Trying

The Wells Fargo way!

1. Get $25 billion in TARP money and buy Wachovia with it.
2. Convince government to change mark-to-market accounting rules.
3. Now, pretend your toxic assets are worth 100 cents on the dollar when they're not.
4. Magically announce $3 billion earnings and watch stock shoot up.

Not bad work if you can get it.

The San Francisco-based bank, which has received billions of dollars in government funds, said it expects to earn 55 cents a share for the quarter ended March 31. Analysts polled by Thomson Reuters, on average, forecast earnings of 23 cents per share.

When asked if the earnings report might spur an equity offering by Wells Fargo, Atkins said that growing good earnings was the best path for the bank. "That's the best way to grow capital," said Atkins. "The best way is to keep earnings growing."

It was unclear whether the figures are comparable with those of a year ago, after the bank issued $25 billion in preferred shares to the U.S. government. It also could not immediately be determined whether the $3 billion was before or after dividends paid to the U.S. Treasury.

Ahh, but that doesn't really matter much now, does it? Watch for all the other banks to mysteriously announce "surprisingly" large "profits" as well. Wells Fargo jumping in two weeks before their scheduled earnings report to crow about the money, and all of this well before the results of the bank stress tests will be announced. How can the banks be in trouble? They're making billions in profits again!

Gee, this doesn't look like a fabulous screw job or anything. Nope.

[UPDATE] And speaking of screw jobs, BooMan discovers the NY Times has already called in the fix on the stress tests.

Dash opens his article by telling us that he has spoken to some (unnamed) bank examiners involved in conducting stress-tests on the 19 largest banks in the country and that they have good news...the books aren't as bad as many fear. Then he tells us that many of the bailed-out banks need to be bailed out again. After that, he gives us this doozy.

Regulators say all 19 banks undergoing the exams will pass them. Indeed, they say this is a test that a bank simply will not fail: if the examiners determine that a bank needs “exceptional assistance,” the government, that is, taxpayers, will provide it.

Imagine a teacher grading exams and telling you that no one will fail because failing students will be allowed to get extra tutoring and retake the test. If necessary, they'll be given the answers.

We're screwed.