Bank of America and Wells Fargo have a disproportionate share of their assets in mortgages and have been particularly hard hit by the housing slump. Their stock has taken a beating over the past four years.
Now Moody’s has lowered the banks credit ratings. Bank of America stock took a particularly hard hit this week. The bank is laying off about 40,000 workers.
The major banks are being targeted by various government agencies (from state Attorney Generals to the representatives of Fannie and Freddie).
Under this government assault, under the restrictions of the CRA and Dodd-Frank, bank stocks seem like a bad bet.
More bad news for banks: Bank of America Corp. (BAC) is among a group of lenders that may face a wave of new lawsuits claiming the system they’ve used for more than a decade to register mortgages cheated cash-strapped counties out of millions of dollars.
Dallas County District Attorney Craig Watkins said state attorneys general and county officials across the U.S. have expressed interest in his lawsuit against Mortgage Electronic Registration Systems Inc. and Bank of America, filed in Texas state court on Sept. 21. Dallas County could be owed as much as $100 million in filing fees, he said.