It's lunch time on this drab Monday, and it looks like both the Dow and the S&P 500 (SNPINDEX:^GSPC) are sleeping in, with both indices looking pretty peaked at the moment.
In the financial sector, doom and gloom is all around, too. Bank of America (NYSE:BAC) is down by 1.44%, and fellows JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) are in the dumps, too, with a drop of 0.78% for the former and a decrease of 1.14% for the latter.
What's the problem today?
As fans of the TBTF sector are doubtless aware, B of A had a rough road last week, which many have attributed to the announcement that CEO Brian Moynihan had been handed a nice, fat raise. Not that the man doesn't deserve it -- when's the last time you saw a capital ratio of 9.25%? Still, the news did seem to cause a dip in the stock's price.
However, that was then, and this is now. Surely, the pay raise doesn't still rankle, as investors have had the weekend to chew and digest that particular nugget. And what to make of the malaise evident in the other two big banks?
I think a couple of other news bites are to blame for the sluggishness in the banking sector today. One is the news regarding the bank's progress on the $25 billion fraudulent foreclosure settlement, and the other has to do with payday loans.
Banks again are seen as stepping on customers
While banks have certainly made headway in the above referenced settlement, the news that less of the money set aside to put wrong to right is helping troubled borrowers doesn't put banks in a very good light. Bloomberg reports that banks have made heavy use of short sales, which gets the job done, but also put people out of their homes. Needless to say, these types of sales are much more lucrative for banks.
In another instance of bad behavior, The New York Times reported over the weekend that major banks such as B of A, JPMorgan, and Wells Fargo have been assisting shady payday lenders in their quest to invade customers' accounts in order to secure repayment -- essentially by ignoring customers' requests to halt automatic withdrawals by these operators.
Are banks now suffering for their nefarious ways? It's certainly possible, with B of A suffering more with the additional drag of last week's news. Tomorrow's another day, though, so stay tuned.
As Foolish, long-term investors, we recognize the need to keep the one-day jumps and jives of a stock in perspective. Even stocks have good days and bad days, so it's important to realize that sometimes they're not portents of dire news, but merely squiggles that we can safely ignore.