Bank of America losses extended Monday, sliding more than 4 percent by the middle of the trading session, following a tremendous selloff Friday after disappointing earnings.
So what's wrong with Bank of America? Is it really that different than the other financials?
Investors are seemingly focused on two story lines: capital markets performance, down by a much bigger margin than their competitors that have reported so far, and questions about financial regulation and Bank of America's skeptical view, particularly about the impact on their card business.
Weakness in Financials as a Whole
Amy Butte, former chief strategist and CFO of Credit Suisse First Boston's Financial Services Division and founder of TILE Financial, said weakness at Bank of America is reflective of the financials as a whole. The problem, she said, is the lack of clarity on financial regulation.
"I think there's uncertainty across the entire industry," Butte said. "We're uncertain about the capital markets, we're uncertain about earnings, we're uncertain about valuation, and it's going to take a long time to figure this out.
It's going to take more than six years before regulators write the rules that will clarify the situation, she said.
On top of that, there's investor confusion about Bank of America's stock, Butte said. "Is it a capital markets stock, is it a bank stock?"
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Paulson & Co., meanwhile, is sticking with Bank of America in the "Recovery Fund" and Bank of America is believed to be part of that fund, which is down 12 percent for June.