Accounting Tricks by Wells Fargo

This From "The Economic Populist" -- follow link for the entire post. Will give you another view of what's happening.



Another wave of foreclosures is approaching

* real estate housing bust

Well Fargo announced today $3 Billion in profits. It was fantastic news and it sent the stock market soaring.

However, one thing that didn't get talked about was why they made so much money.

Wells Fargo CFO Howard Atkins discusses the banks $3 billion reported first quarter 2009 earnings. Atkins hypes the impact of mortgages to the bottom line, due to low interest rates and foreclosure selling no doubt, but shockingly admits at the 7:45 mark that with the writedowns that would have been required by Mark to Market the bank actually lost money on the quarter.

To put it another way, Wells Fargo made money because the government allowed them to play "let's pretend your assets are worth something".

The reason why the government back-tracked on requiring banks to price their assets to market value was the premise that those assets are actually worth more than the market says they are. In other words, the banks are smarter than the investors.
That's a pretty shaky premise to believe. It requires us to accept the idea that those trillions of dollars worth of mortgage-backed securities are actually worth something close to face value. For this premise to be true you have to believe that the housing market is about to bounce back. It has to bounce back to historic highs in the midst of the deepest economic downturn since the Great Depression. Does anyone really think that is going to happen?

"I refer to the American housing market as “the big slum.” A slum is where the market value has fallen below the replacement value. It doesn’t make sense to fix anything. You don’t fix it, you just let it go to hell. There’s no way to get your money back."
- Eric Janszen

One person who has been consistently correct about the housing implosion, Mr. Mortgage, believes otherwise.

Are you ready to see the future? Ten’s of thousands of foreclosures are only 1-5 months away from hitting that will take total foreclosure counts back to all-time highs....
Foreclosure start (NOD) and Trustee Sale (NTS) notices are going out at levels not seen since mid 2008. Once an NTS goes out, the property is taken to the courthouse and auctioned within 21-45 days.