I seriously do not understand Wall Street:
Investors are back to worrying about banks.
Long-present unease about soured loans bubbled over on Monday after Bank of America (BAC) said it set aside $13.4 billion to cover lending losses, even as it posted a profit for the first quarter, and as anxiety grew about the results of the government’s “stress tests” to determine if banks will need more government bailout money.
While Bank of America and other big banks like Citigroup (C) have fared better so far this year than many believed they would, nervousness is growing now over the massive losses from defaulting loans that are yet to come. On Sunday, White House chief of staff Rahm Emanuel said some banks will need help.
Financial stocks suffered some of the day’s worst declines: Bank of America plunged 24.3% and Citigroup fell 19%.
When I saw the Bank of America report this morning, my first (and admittedly uninformed) thought was “here comes the pump and dump.” Maybe I’ve grown overly cynical, but it just looks to me like this is just another little feeding frenzy before the next dive.
But what I really don’t understand about the crackheads on Wall Street is how any of them could honestly think things would be back to the way they were in just a short amount of time. From what I understand, things are never going to be back the “way things were.” That era just seems to be over, and with the imminent CRE crash and tons of loans about to go bad, I can’t honestly figure out why anyone would think this was over.
And by the way, I just love all the banks who took hundreds of billions in TARP money, didn’t start lending again, and now want to repay the money back (but just never seem to get around to it). Is there anyone, and I mean anyone, who thinks that is motivated by anything other than executive compensation?