Notice anything funny about Bank of America (NYSE: BAC) lately?

Shares now trade at around half of book value, and about 0.8 time tangible book value. That's the lowest valuation since mid-2009, when nationalization of big banks was still a real option, and the economy was in threatcon delta mode. Shares are down 30% over the past year, and trade lower today than they did in April 2009, lagging the S&P 500 by 50%. All big banks, including Wells Fargo (NYSE: WFC), JPMorgan Chase (NYSE: JPM), and Citigroup (NYSE: C), have been hammered lately, but none like B of A.

The "why" isn't a secret. Housing prices are at new lows and heading lower, and foreclosure lawsuits could cost tens of billions of dollars. Bank analyst Dick Bove lays it out:

It is now believed that BAC will lose an additional $32B in the next three years related to the housing crisis. Approximately, $9B of this money will be derived from its reserve. The remaining $23B will be charged to earnings at the rate of $2B per quarter for the next three years. It is likely that the bank will sell additional assets to soften the impact on capital.

That's utterly terrible. The worst is the length of time. Three years might as well be an eon to most investors. Discussing foreclosure settlements with state and federal agencies, CEO Brian Moynihan recent said, "I think it will take longer than people will think."

OK. The company's a mess. Still, half of book value? With the unprecedented stimulus showered over banks, few realistic situations could justify shares trading for half of book value. One, maybe: The economy goes face-first back into the depression abyss. That might happen, but no other asset class is pointing in that direction. And B of A is expected to stay profitable over the next few years, mind you. The losses Bove talks about are pre-earnings charges.

A more likely explanation? Shares are cheap. Bove suggests as much: "The losses BAC is about to take related to housing are historic in proportion. However, the stock seems to have already discounted this problem in its present price."

What do you think?

Fool contributor Morgan Housel owns B of A preferred. Follow him on Twitter @TMFHousel. The Motley Fool owns shares of JPMorgan Chase and Wells Fargo. The Fool owns shares of and has opened a short position on Bank of America. 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.