DAN DORFMAN
February 15, 2008
If Jesse James and John Dillinger were around today, worried bank officials no doubt would plead with the robbers: “Please, not us, we’re already writing down a boatload of bad assets.”
The request would not be without merit. Reflecting a slew of questionable loans, the nation’s largest banks and brokerages, among them Citibank, Bank of America, Merrill Lynch, and UBS, have been forced to write down more than $100 billion of bad assets, and the worst may be far from over on the banking front.
Not unexpectedly, bank stocks have taken a beating, tumbling an average 20.8% last year and declining about another 7.5% this year.
In response, a number of brokerage firms and research organizations ? hoping for strong rebounds ? are aggressively pushing the shares of many of the beaten-down big names, conspicuously Citigroup, JPMorgan Chase & Co., Bank of America, and Wells Fargo.
Some pros, though, question such pitches, arguing that while large-cap bank stocks may look cheap, those pushing them are ignoring the danger of more balance sheet chaos and even lower bank stock prices. In other words, they say, investors are being pitched damaged goods at too early a stage.
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