Stocks are taking a breather this morning after the past two bullish days, with the Dow Jones Industrial Average (DJINDICES:^DJI) and the broader S&P 500 (SNPINDEX:^GSPC) losing 0.1% and 0.2%, respectively, as of 10:05 a.m. EST.

The fiscal cliff
Resolving the fiscal cliff doesn't just involve negotiations between the White House and John Boehner. Both President Obama and Boehner have to sell the compromises they're making to their parties' representatives in Congress -- the people who will have to approve the final package with a vote. After a burst of activity over the weekend and on Monday that moved things forward at the highest level, the two leaders went back to their respective camps yesterday to test the waters internally.

Meanwhile, Republicans have hoisted the notion of a "plan B" -- a much more focused backup plan that would avoid tax rises on all but those with an annual income above $1 million (something Boehner conceded over the weekend). This plan amounts to a distraction, as there is little hope it would pass the Senate. Either way, up until last week, I thought there was almost no chance politicians would resolve the fiscal cliff before Jan. 1. I now believe it's a distinct possibility.

The micro view
Meredith Whitney, the analyst who made her name when she wrote in October 2007 that Citigroup (NYSE:C) would be forced to cut its dividend as a result of subprime-related writedowns, told CNBC yesterday that Bank of America (NYSE:BAC) could quadruple its dividend in March once it receives the approval of the Federal Reserve. Whitney went further, stating: "There's an incredible growth opportunity within the financials, particularly Bank of America, Citigroup, Discover Financial -- and there are others."

Here's a graph, similar to one I put up in this column on Monday, that shows the year-to-date stock performance of the four largest commercial banks relative to the S&P 500:

BAC Chart

BAC data by YCharts.

Banks' outperformance has been stunning this year – particularly B of A's -- and some investors may believe they've missed the boat. However, it's worth remembering that the group dramatically underperformed in 2011. Furthermore, it's a fallacy to believe that past gains determine future returns; what matters is earnings potential (or asset values) and the initial valuation you pay for those earnings.

Alex Dumortier, CFA has no positions in the stocks mentioned above; you can follow him @longrunreturns. The Motley Fool owns shares of Bank of America and Citigroup Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.