US Banking Results Commentary

US banks’ quarterly results came in with an upside surprise. Goldman Sachs are positioning for TARP payback with another round of aggressive legacy asset write-down. Wells Fargo bank reported a ‘record’ profit with earnings of 55 cents a share after paying preferred stock dividends of US$372mn on its US$25bn of preference share from TARP and latest JPMorgan reported 1Q EPS of $0.40, driven by solid investment banking revenues partially offset by higher credit costs.

Hmm, I wonder if this is true or an extreme exaggeration of the truth, especially after the FASB reverts to mark-to-myth accounting, receive billions of taxpayer money including financial assistance acquiring Wachovia and then turn out to not need it, right? In an another word, we are robbed! So which is it?

But as long as half truths pop the indices, nobody is going to complain. People only want the truth when the market is going south, not when it is climbing, right? It is maddening, whether it is perception or reality and bad news is simply shelved for a later date. I am just interested to know what will cause the Street to stop ignoring lies and bad news.

Nouriel Roubini said that last September’s spree of bank takeovers deepened the crisis because it made the already-too-big banks even bigger. He may well be right, more interesting is what this tells us about the future of US banking industry.

Nor did the trouble stop with the banks. Two of the US Big Three automakers – General Motors and Chrysler LLC moved closer to bankruptcy as the government rejected the American carmakers’ plan for reorganizing. But then, funny thing happened with each banks to-date announcing promising results, surprising investors and igniting a late-quarter stock market rally.