Big Bank Stocks Have Been Crushed: Here’s Why

By Pam Martens and Russ Martens

The conventional wisdom was that the Fed’s rate hike on December 16 of last year was going to help big bank stocks by boosting their ability to charge heftier interest rates on loans. That theory has pretty much been relegated to the dust bin of financial fairy tales along with the Fed’s prediction that the slump in oil prices would be “transitory.” Bank stocks have been cratering like it’s early 2008 all over again and oil prices can’t find a floor, having broken through $60, $50, $40 and now $30 a barrel over the past 12 months.

On top of the oil rout, which may spell corporate credit downgrades, bankruptcies, higher loan loss reserves – none of which are good for bank stocks – there are other bank risks not on the public’s radar screen.