US banks and 'profitability'

The recent ummmm 'rally' in equities has largely been driven by wee little comments by our banking ummm errr 'leaders', notably Pandit, Dimon, and Lewis (Citi, Chase, BoA), who in near-unison last week informed us that they had been profitable in January and February. CNBC rejoiced, and stocks rose: "Hey - didja see Citi's up by like 150%, all the way to $2.50!!!"

Well, forgive me for being a tad skeptical. We've seen no real numbers thus far (and won't for another month) and what little has been made public is rather ambiguous. And, oh - haven't we been through about 100 rounds of previous reassurances from these very same bankers that all is well?

Here's one example of a statement that should cause one much pause: In Mr Pandit's leaked (haha) internal note to employees he notes, among other really good news, that 'deposits have stabilized'. Huh? Deposits have 'stabilized'?? In the midst of an epic flight to cash, in the teeth of massive governmental guarantees of deposits all over the globe, all Citi can muster is 'stabilized'? Please already. Any normal and healthy bank has seen a huge influx of deposits of late (albeit one that could vanish in a moment's notice) yet here's Citi basically telling us that "fewer people are taking their money from us and fleeing to competent institutions that do not need regular and massive taxpayer bailouts and which do not threaten the foundation of global prosperity as we know it"

Gee, color me persuaded.

And, as my pal Derek pointed out over the weekend, banks are seeking 'profitability' in shameful ways, one of which would appear to be milking unemployment benefits: http://www.cnn.com/2009/US/03/13/unemployment.fees/index.html

Excerpt:

According to the U.S. Department of Labor, 30 states offer direct deposit cards to the unemployed. Many of the nation's biggest banks have contracts with the individual states. JP Morgan Chase, for instance, has contracts with seven states and has pending deals with two others, according to Chase spokesman John T. Murray. About 10 states, the Labor Department says, pay by check only.
The National Consumer Law Center says fees range from 40 cents to a high of $3 per transaction, if the debit card is used at an out-of-network ATM. Most banks give jobless debit card users one free withdrawal per deposit period, which averages every other week in most states. But consumer advocates, including the Law Center, say the unemployed "should be able to obtain cash and perform basic functions with no fees."

So, bank profitability is partly driven by the explosion in unemployment? This is good news? This is ethical? This makes fundamental good business sense?