Regulators are asking Wells Fargo & Co. to raise more capital after government “stress tests” showed the bank would have trouble surviving if the recession worsens.
San Francisco-based Wells Fargo is trying to dissuade regulators from forcing it to raise capital, these people say. The government will brief banks Tuesday on its final decisions about their appeals.
Oracle of O’s rebuttal forthcoming once he emerges from the Jacuzzi.
Wells Fargo Asked To Raise Money After Stress Test [AP]
I’m not saying I’m against ending the tax havens and tax dodges (especially for individuals), but I don’t know how this can be spun as a ‘good thing’ for American business, the market, or especially the banks.
The only good thing is that the govt. has all of this under control now. Quit worrying, and rejoice in the fairness and equality that is now upon us at last.
we all know the bank needs at least $9 bn to fill the hole in its current TCE (to get it to the targeted 4% line), this confirms that under “stress” test, they’ll need more. nonetheless, the stock is up close to 10% today – irrational exuberance is back in full force. I guess the bulls believe the O^3 will save them…think they know about that little thing call dilution?
This may sound like crazy talk, but to me it seems that letting at least one BIG banks fail would help to appease some of the populist rage.
I can see it now…”They let Chrysler fail, so they better let one of these big banks fail”….after one of the larger banks fail, the same person would state something like….”Good, now we’re even”
Remember who I’m talking about here, so you’re argument for rationality would not apply. Seems totally outrageous, but things are a bit crazy…
to #3
visse iz sceau trou
“the bank would have trouble surviving if the recession worsens.”
i thought that according to the budget that the economy was going to rebound in 2010. Are they not using the same assumptions for the budget that they are for the stress tests?
@3 – agreed – there will be big equity raises in the next few weeks and it seems somewhat irrational to be buying now.
Of course the banks (and Treasury) have a lot of incentive to push prices higher this week ahead of those raises.
Is it just that funds are underweight financials? Maybe. Or it could be that people think this will be the last of the big equity raises and that further problems will be handled through mergers.
I have to admit, I’m not so sanguine. If I were any of these guys, I’d issue a crapload of common stock and build a big, huge cushion. Like usual, they can always do a stock buyback 50% higher…
@4 – we already did that by letting Lehman and Wamu fail and taking BSC down for $10.
Wow, the populace sure has a short memory…
I am now using Benjamins to light my cigars – they light easier than the twenties.
~the Muleskinner~
Wells common +10% on that news.
@7, no more mergers will occur between the big banks…they’re already too big
@8…you’re not looking at it from their perspective.
They have not seen any of the big banks fail. They have no clue who Lehman is, as it more than likely is not a household name in a majority of the U.S. As far as their concerned, WaMu did not fail, they just became Chase.
They want to see failure at a very palpable level.
@7 – we don’t need another bad merger (see bac/ml for reference). further, in this market, why would anyone pay a premium to current prices? these will be take-unders or gov’t subsidized closures.
shorts probably have to cover after getting their a$$es pounded in a month when the s&p was up 9%. this will reverse course. wfc is at 2.44x tang book while jaime d is at 1.46x, there is no reason golden west, er I mean, wells should trade at such a premium to jpm.
@12 – palpable like they lose their deposits?
As usual Bess reports before CNBC.
What are the odds that, by the time the week is out, we’ll be seeing this headling again and again.
“______________ relegated to Wells Fargo, Bank of America, Citi Status”
@16- what’s a headling?
Sorry, have now learned to do spell check and then press “post comment”. Headling = headline.
@14…
“Citibank declares bankruptcy”
“Bank of America declares bankruptcy”
Stress tests make me horny.
Dylicious Ratidreamy
the Emanuel ratchet at work
Does anyone else wonder about what Dylan Ratigan is up to?
Autofellating is the new killing it.
@14- Palpable as in they watch a large number of rich people become poor. In the populist mind, wiping out a bank means wiping out the source of income of bank employees, who work with money and therefore must surely keep a lot of it for themselves. One common source of outrage is the small amount of the early payments on mortgages that goes to principal repayment. These people don’t generally stop and think about not taking out such a long mortgage, or just not borrowing so much.
@22 No
WFC SHARES NOW +18% ON THE AWESOME NEWS!
@26 – we need the forehead slapper on this one…talk about crazy. bac is up 13%.
who was it here that wanted to sell us those WFC $12 strike Sept. calls?
@28 – correction, it was the march $10 puts in late january. stock dipped in the $7′s in late feb/early march. check the posts it’s there for all to see…