Count thy sins: Negative analysis decimates banking stocks


On Monday, several major banks got a firsthand lesson in the dangers posed by an unsure market, as an analyst's report immediately caused a sharp drop in their stock values. This episode, a strong demonstration of the volatility of the current financial sector, shows that Wall Street faces a long road to stability.

The report, written by Calyon Securities analyst Mike Mayo, stated that eleven of America's banks were "underweight," and predicted that their loan losses could exceed Great Depression levels. When this analysis hit the market, shares in the banks -- including BB&T, Fifth Third, Bank of America, Citi, Wells Fargo, PNC, KeyCorp, and JP Morgan Chase -- all dropped in value, and the KBW Bank Index fell by 3.8 percent.