Here's The REAL Reason Bank Stocks Are Getting Smoked

Everyone has their reasons bank stocks have been getting hammered lately: Regulations are piling up, law enforcement won’t quit dogging them over past activities, the economy is mediocre, etc.

But as David Goldman argues, it really comes down to this: The market value of subprime/mortgage related assets is plunging.

These three charts deserve a lot of attention.

Here’s AAA-rated subprime…

abx

Photo: Markit

And securitized commercial mortgage backed securities

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Photo: Markit

And the super-ugly AA-rated stuff.

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Photo: Markit

Thus the plunge in bank stocks — which remain highly exposed to all this stuff (although as Goldman points out, less so, thanks to Treasury buying) have fallen accordingly).

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