Interesting. All the recent happy talk about Wells Fargo — which has spilled over to BofA’s stock price as well — gets pricked by someone taking a closer look at Wells’ numbers and finding them lacking.
“Details were scarce and we believe that much of the positive news in the preliminary results had to do with merger accounting, revised accounting standards and mortgage default moratoriums, rather than underlying trends,” Frederick Cannon of KBW Inc. said in a new report, according to Bloomberg.
And what caught my eye is that Cannon said that if the recession lasts thru Q1 of 2010 then Wells will need another $25b. in capital on top the $25b. the bank owes in federal bailout cash. Seems a reasonable number, especially as unemployment dings income for the rest of this year.
