This week was all about the eagerly anticipated first-quarter earnings for the major banks.

Wall Street was trying to use the numbers to ascertain whether we're through the worst of the credit crisis, or whether we're in for a bigger disaster than the market anticipated. Bad news was good news as long as it was expected. So, without further ado, here are this week's banking highlights.

  • The week got off to a nasty start when Wachovia Corp. (NYSE: WB), the nation's fourth-largest bank, announced worse-than-expected earnings, a 41% dividend cut, and a plan to raise $7 billion in stock offerings. In other words, the company is losing oodles of money and desperately needs to raise capital. The market fretted over the news -- if Wachovia is struggling this badly, what will become of other struggling banks? This was also a bad omen because it portends less consumer credit, lower dividends for shareholders, and more job cuts ... lovely.
  • On Tuesday, US Bancorp (NYSE: USB), the nation's seventh-largest bank, painted quite a different picture. The company posted an ever-so-slight drop in net income and an increase in revenue over the year-ago quarter. It also announced a pocket-change-like writedown of merely $253 million. US Bancorp reassured the market that there are still well-managed banks out there. Bravo!
  • On Wednesday, things started to look a whole lot better when JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) beat earnings estimates and triggered a robust market rally. Wells Fargo actually posted a $2 billion profit and an approximately 12% increase in revenue, as well as manageable charge-offs and writedowns. Although JPMorgan took a 50% fall in profits and $5.1 billion in loss provisions, the company, along with Wells Fargo, remains well-capitalized, and both appear equipped to handle the credit crisis. 
  • Merrill Lynch (NYSE: MER), the largest broker in the world, announced a brand-new batch of $6.6 billion writedowns, a worse-than-expected quarterly loss, and 4,000 more job cuts. The market seemed to think that news this bad can only get better, and the stock rallied 4%. The new chief executive, John Thain, has every motivation to deal with balance-sheet issues and write off as much bad news as possible in this quarter. Based on the ugliness of the earnings, he appears to be doing just that. Way to be, Johnny.
  • Not to be outdone, Citigroup (NYSE: C) on Friday announced a $5.1 billion loss on $14 billion in fresh write-offs. The stock rallied 7% in midday trading after the announcement, because the $5.1 billion loss is so much better than the $10 billion loss last quarter. Sure, $5 billion is a lot of dough, but the rate of catastrophic write-offs is falling. Nobody said they wouldn't get their hair mussed.

This week's banking news was predictably miserable, which is so much better than unpredictably miserable. The market was buoyed by the fact that bank earnings weren't even worse than they were. That's what good news looks like these days. Although things are bad, the market was relieved not to see signs that the credit crisis is becoming a greater disaster than widely anticipated. So, the market was up sharply for the week.

This isn't over, though. Next week will bring more crucial earnings announcements. Stay tuned.

Related Foolishness:

US Bancorp and JPMorgan are Income Investor recommendations. For a 30-day free trial of this dividend-seeking newsletter, click here.

Fool contributor Tom Hutchinson holds no financial position in any companies mentioned. The Motley Fool has a disclosure policy.