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Could the Banks Bounce Back In 2012?

Although the financial sector took a hit on economic woes Thursday, a top analyst thinks the banks could bounce back in 2012, especially if policymakers are able to ease the increasing strains on the global financial system or even solve Europe’s sovereign debt crisis altogether.

A “global financial meltdown” was averted when the world’s major central banks on Wednesday announced a coordinated plan to support the global financial system, said David Hilder, an equity research analyst at Sesquehanna.

Bank stocks had been trading on concerns Europe might see a Lehman Brothers-type event, Hilder said. Lehman Brothers had been the fourth largest investment bank in the U.S. On September 15, 2008, it filed for Chapter 11 bankruptcy protection, marking the largest bankruptcy in U.S. history. Thanks to the coordinated efforts of the world’s central banks, Hilder thinks a Lehman-type scenario is now less likely to play out. In turn, he has a favorable view on most bank stocks, calling them “incredibly cheap.”

Take Bank of America , for example. Hilder likes the New York City-based bank because it has strong franchises in both consumer and commercial banking. He said it’s also one of the top three global investment banks and has the best retail brokerage system in the world. BAC is a cheap stock that will do better over time, he added.

“If Europe does come to some credible addressing of its problems, you will see these stocks go a lot higher over the next 12 months,” Hilder said, who spent seven years as managing director at Bear Stearns and was recognized as a top analyst by “The Financial Times” and StarMine.

Keith McCullough, CEO of Hedgeye Risk Management, isn’t holding his breath. Valuation isn’t a catalyst here, he argued.

Should policymakers fail to solve Europe’s sovereign debt crisis, Hilder agreed with McCullough that the world would be in a “much more dangerous situation.” He’s not sure any stock or sector would do well in that kind of an environment.

If trader Stephen L. Weiss were pressed to trade the banks, he would go with JPMorgan Chase and Goldman Sachs . Goldman, he said, is a “great franchise.” An author and founder of Short Hills Capital, Weiss has nearly 25 years of experience on Wall Street.

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Trader disclosure: On Dec. 1, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Weiss owns BRCM, QCOM, EUO, SLV; Grasso owns AA, AKS, AMR, ASTM, BA, BAC, D, LIT, MHY, PFE, PRST, S, XLU;

Steve Grasso
Stuart Frankel & Co and its partners own CSCO

Stuart Frankel & Co and its partners own CUBA

Stuart Frankel & Co and its partners own GERN

Stuart Frankel & Co and its partners own GM

Stuart Frankel & Co and its partners own HPQ

Stuart Frankel & Co and its partners own HSPO

Stuart Frankel & Co and its partners own JPM

Stuart Frankel & Co and its partners own MET

Stuart Frankel & Co and its partners own MSFT

Stuart Frankel & Co and its partners own MU

Stuart Frankel & Co and its partners own NYX

Stuart Frankel & Co and its partners own PRST

Stuart Frankel & Co and its partners own RDC

Stuart Frankel & Co and its partners own UAL

Stuart Frankel & Co and its partners own WFT

Stuart Frankel & Co and its partners own XRX

Amelia Bourdeau
No disclosures

David Hilder
No disclosures

Craig Bergeg
FBR acts as a market maker or liquidity provider for the company's securities: BRCM.

Adrienne Tennant
AEO - JMS is a market maker in this security and may at any time hold a long or short position in this security; JMS may seek compensation for investment banking services from the subject company in the next 3 months; the research analyst is compensated on based on, in part, JMS profitability which includes its investment banking revenues.

ANF - JMS is a market maker in this security and may at any time hold a long or short position in this security; JMS may seek compensation for investment banking services from the subject company in the next 3 months; the research analyst is compensated on based on, in part, JMS profitability which includes its investment banking revenues.

GPS - JMS is a market maker in this security and may at any time hold a long or short position in this security; JMS may seek compensation for investment banking services from the subject company in the next 3 months; the research analyst is compensated on based on, in part, JMS profitability which includes its investment banking revenues.

LULU - JMS is a market maker in this security and may at any time hold a long or short position in this security; JMS may seek compensation for investment banking services from the subject company in the next 3 months; the research analyst is compensated on based on, in part, JMS profitability which includes its investment banking revenues.

ARO - JMS is a market maker in this security and may at any time hold a long or short position in this security; JMS may seek compensation for investment banking services from the subject company in the next 3 months; the research analyst is compensated on based on, in part, JMS profitability which includes its investment banking revenues.

Jason Gere
RBC Capital Markets is currently providing Jarden Corp. with non-securities services.

RBC Capital Markets is currently providing Procter & Gamble Company with non-securities services.

RBC Capital Markets is currently providing Kimberly-Clark Corporation with non-securities services

RBC Capital Markets has provided Estee Lauder Inc. with non-securities services in the past 12 months

RBC Capital Markets has provided Procter & Gamble Company with non-securities services in the past 12 months

RBC Capital Markets has provided Kimberly-Clark Corporation with non-securities services in the past 12 months

CNBC.com with wires.