Thursday, April 9, 2009

Will Wells Fargo Detail Uncle Sam Sources of Profit?

How much did Uncle Sam directly or indirectly fuel Wells Fargo's record first quarter profits? Will Wells Fargo come clean on the sleight of hand? Taxpayer rescued AIG paid counterparties more than $90 billion. Wachovia, now part of Wells Fargo, received $1.5 billion. Those payments warranted investigation. Reuters reported:

Neil Barofsky, inspector general of the Treasury's Troubled Asset Relief Program, said in a letter to Rep. Elijah Cummings that the inquiry will look at whether AIG paid "counterparty claims at 100 percent of face value and was any attempt made to renegotiate and close out these claims with 'haircuts.'"
How much did the change in fair value accounting impact Wells Fargo's earnings? Was Wells ready to mark to model? That gift arose from Congressional intimidation of the head of FASB.

How much did the Fed pay in interest on excess Wells Fargo reserve funds? WellsFargo received $25 billion in TARP funds. How much is parked in an interest earning vehicle and not on loan?

WellsFargo earned $3 billion, but it's rather suspect. No wonder Tim Geithner postponed bank stress tests. Does he want banks to bask in the Uncle Sam "prop up" spotlight for a bit? Maybe so.