Bad news for the sector came from Wells Fargo, which will be investigated by the House Financial Services Committee for opening about 2 million accounts without customer authorization. The Justice Department also issued Deutsche Bank an opening settlement figure of $14 billion for a set of cases related to mortgage securities. The bank said in a statement it "has no intent to settle these potential civil claims anywhere near the number cited."
Wells Fargo shares fell more than 6 percent this week, while Deutsche's Frankfurt-listed shares fell 12 percent during the same period.
"If we get a string of bad data — maybe it's jobs data, maybe it's manufacturing data — they may not go the 50/50 in December and these banks need higher rates for them to continue to go up," Nathan said. "I don't really see anything that compelling. I don't see interest rates ramping up between now and the end of the year ... I think it's going to be a political hot potato for a little bit."
Trader Steve Grasso said "there's no reason to buy banks" right now.
Trader Karen Finerman disagreed and said that the Federal Reserve not raising the benchmark federal funds rate is already priced into the sector.