David Faber: Regional Banks 'Starting to Scare People'

Citigroup is holding its annual shareholder meeting Tuesday. Will dissident investors shake up the company's ranks? CNBC's David Faber reported on the state of financials, as Citi CEO Vikram pandit says he "intends to see this thing through."

(Update: At Citigroup's annual shareholder meeting, the financial giant re-elected all its directors and all shareholder proposals were rejected.)

Faber notes that a J.P. Morgan analyst is "staying negative" on Bank of America. The analyst believes that BofA should "follow Citi" and announce an equity-for-preferred swap.

Faber says the nature of the rally is "a very interesting" indicator. As of April 17, it was led by "incredibly low priced" stocks: shares under $5 gained some 259 percent; shares over $30 rose a mere 75 percent.

Regional banks are "starting to scare people, to a degree," Faber said, as observers wait to hear about possible loan losses and credit-quality issues. In particular, KeyCorp is "getting hit," Faber said.

More Financials in the News:

JPMorgan Chase

US Bancorp