Michael Shulman

Why Wells Fargo Is a Great Buy

Have you looked at their balance sheet? See my post on Seeking Alpha -- they are short many tens of billions of core capital and are using purchase accounting to get through 2009 - and this must end on December 31 of this year. Their addition to reserves is coming at a significantly slower pace than their loan losses. They own the world's largest chunk or awful sub-prime loans not yet written down because they are on their books -- Wachovia wrote them, they are not in the form of bonds - and they also have almost $350 billion in commercial real estate loans on their books. Before writing about their operating earnings, which are mythical due to purchase accounting, you need to re-examine their balance sheet -- oh, and you failed to mention their $2 trillion in off balance sheet obligations, they claim only $115 billion must come on balance sheet in January due to new FASB regulations.

Latest Bank Leverage Stats - Some Still High

THis does not include off balance sheet assets....Citi has $1.2 trillion.