Tuesday's Terrible Financial Stocks

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Welcome to Slaughterville, U.S.A, home to some of the bloodiest financial stocks this country has seen in years.

Monday and Tuesday marked some of the worst days financial stocks have seen in recent memory. The pain caused by the collapse of IndyMac, the ongoing clown show between two teetering government-chartered mortgage giants, and rumors about the fate of Washington Mutual (NYSE: WM) and Lehman Brothers (NYSE: LEH) are collectively leaving few financial stocks immune from the massacre.

Here are Tuesday's biggest losers:

Stock	Tuesday Freefall	One-Year Decline	Comical Dividend Yield*
Fannie Mae (NYSE: FNM)	(27.1%)	(89.2%)	19.7%
Freddie Mac (NYSE: FRE)	(24.5%)	(91.4%)	18.6%
MF Global (NYSE: MF)	(20.37%)	(63.5%)	--
Corus Bankshares (Nasdaq: CORS)	(20.9%)	(85.3%)	28.6%
Central Pacific Financial (NYSE: CPF)	(14.4%)	(77.1%)	13.5%

*Don't keep your hopes up.

What should you think about this wild ride in financial stocks? The dramatic swings that huge companies like Freddie Mac are enduring -- down 50% in the morning, only to be trading in the green by lunchtime, like we saw on Monday -- can be interpreted two ways. Either financial stocks are in much, much deeper trouble than previously thought, or nobody has the foggiest clue what's going on. Short of having the kind of courage that would make a soldier blush, neither is very reassuring.

Sifting through the rubble is risky business; No one seems to know who's holding what assets, and pricing those assets is becoming an exercise in accounting wizardry. Surely, there are bargains being created out there, and capitulation days like we've seen this week are always good times to start sifting through the carnage. But please, enter these choppy waters at your own risk.

As Warren Buffett likes to say, "You only find out who is swimming naked when the tide goes out." For now, there's still plenty of tide waiting to recede.

Related financial Foolishness:

• What bank might be the next to fail?
• What Fannie and Freddie never stood a chance.
• When, for Pete's sake, will this credit crisis ever end?