We've gotten accustomed to good earnings. The first quarter results have been "good," even at the most troubled big banks such as Citigroup and Bank of America. But you have to wonder if all this stock rallying amounts to a mere dead cat bounce, a sucker's play. 

Citigroup certainly gave up some gains due to the earnings-driven uptick: 

• Citi took only $2.7 billion against expected loan losses. That compares with $4 billion by J.P. Morgan Chase, which probably has a sounder portfolio of credits. Bank of America set aside $6 billion. Citigroup's reserves stand at 121 percent of nonperforming assets, down from 171 percent a year ago. JPMorgan's reserves, on the other hand, are at 241 percent.
• The card, money management and consumer banking franchises showed declines of 10, 20 and 18 percent, "even as Citi is aggressively raising fees on customers," notes MarketWatch.
• The credit quality prognosis worsened. It's fair to say the worst is not behind the bank. The economy may not have hit bottom and that will bring its loan-loss reserve issues into brighter focus.  

There are some positives, to be sure. Revenues trended up and Citigroup's net interest margin is also trending favorably. It's Tier 1 Capital ratio is strong at 11.8 percent. Citigroup's tangible capital ratio is another issue, of course. The stress tests will reveal much. 

For some, the endgame is inevitable and ugly, warranting some extraordinary government action. Chris Whalen, the respected analyst at Institutional Risk Analytics, thinks the bank perhaps ought to be put out of its misery. He tells TheStreet.com that management ought to be replaced, bond holders need to be converted to equity (ouch!) and that the government ought to take steps to essentially take it over. He suggests Mcorp as a model. 

Some have taken the view that Citigroup's bag of earnings tricks may be running dry soon. 

The next milestone--after the annual shareholders meeting Tuesday--will be the results of the stress tests. The government will likely move ahead with the exchange offers, but you have to wonder if that will really be enough. The question, "how sick is this bank, really?" has been debated ad nauseum. We may finally be in for some clarity. "If we're not talking about closing Citi and a couple of other smaller, profoundly insolvent regional banks by the end of the second quarter of this year I think we've got a big credibility problem," Whalen tells the publication. - Jim