Wells Fargo Showing Record Profits?
Thursday, April 9, 2009
Wells Fargo, who received $25 Billion from us the taxpayers, has announced $3 Billion 1st quarterly profits, $20 Billion in revenue. Surprisingly Wells Fargo is doing very well. A week from now other major banks such as JP Morgan, Bank of America and Citibank will announce their 1st quarterly profits.
Wells Fargo's stock jumped up over 30% after the great news, as people saw a decent bank to invest in. Wells Fargo reports strong mortgage activity since 2007, when the housing crises started. Wells Fargo has received $190 Billion worth of mortgage applications, 25% of whom applied for loans to purchase a house. Primarily the applications were for refinancing houses.
Although it is looking great for Wells Fargo, there were still $4.6 Billion losses from foreclosed homes in the first quarter. Last year 1st quarterly profits for Wells Fargo were $2 Billion and they still received the $25 Billion aid from government. Wells Fargo was not in need for the aid, it was giving to them to be fair, as the government gave aid to every bank. On the brighter note, we see more people investing in major banks such as Bank of America after this report from Wells Fargo. Bank of America is up more than 30% also, JPMorgan is up just over 19 %while Citi Group is up over 12%.
BOTTOM LINE:
Although there are some progress in the major banks, as we see record profits, it is not yet a sign for future improvements. The only way this recession will end is when banks such as Wells Fargo start lending to businesses and people, which will get the market going. I don't mean lending to people with 100% financing, who could not afford them, which is what got us into this mess in the first place. I mean lending to people with normal amounts of regulations, not too tough and not too weak. Tough regulations will never end the recessions, weak regulations will cause a recession, we need something in the middle. Due to the very tough regulations for lending, very few businesses and people are able to get loans. Recession will be over and banks will get better as soon as they start lending.
