The share prices of the big banks are all trailing the Dow today, and it's a wonder they're not dragging further behind. Nearly all of the latest news for the financial majors is negative; perhaps it's only the bullish remains of previous, record-busting quarters keeping them afloat.
These stocks need all the good vibes they can get. This is especially true of Bank of America (BAC +0.13%), which is on the wrong end of the latest high-profile lawsuit in the sector. For the many of you having a hard time keeping track of the dizzying amount of legal action being thrown at big-name financials these days, the bank yesterday was found liable for fraud. A federal jury found that its Countrywide Financial subsidiary engaged in deceitful practices against Fannie Mae and Freddie Mac via a program charmingly named the "Hustle" during the crisis era.
Any business that titles a service it provides the "Hustle" pretty much deserves what it's inevitably going to get. In Bank of America's case that's a shame, as its most recent quarterly results showed some promise and were better than many expected. The Countrywide purchase, effected in 2008, wasn't a particularly smart move in the first place, and it looks like the unit will continue to be an albatross.
Rubbing salt in the Bank of America wound is the company's latest round of job cuts in its mortgage operations, as if the market hasn't seen enough proof of that segment's slowdown in recent months. According to a report in today's Wall Street Journal, the company has served notice to around 1,200 employees that their services will no longer be required. Apparently, this is part of a broader effort to eliminate around 3,000 mortgage workers this quarter.
At least Bank of America has company in the bad news jail cell. JPMorgan Chase (JPM +0.85%), the firm currently hauling out the wheelbarrows to collect the billions it'll pay the Department of Justice for its colossal legal settlement, will have to hold another set of meetings with its lawyers. An article in today's New York Times says that the government is "preparing to take action" in an investigation of the bank's relationship with Ponzi scheme villain Bernard Madoff. JPMorgan Chase is a favorite target of lawsuits and investigations, and -- today at least -- its share price is paying the price for that unpopularity.
Banking stocks might benefit, at least a little, from lifts in the dividends they pay out. Unfortunately, that's not the case this quarter, as the amounts are cautious and well in line with recent history. Bank of America today declared its usual princely sum of $0.01 per common share. That comes exactly one week after Citigroup (C +0.69%) decided to dispense the same amount for its common stock.
Both firms have been paying that penny forever, it seems. Citigroup adjusted its distribution to that figure in February 2009, just before it took a two year-plus break from handing out any dividend at all. Bank of America began its one cent shuffle -- a downgrade from $0.32, ouch! -- with its June 2009 disbursement.
Wells Fargo (WFC +1.09%), which declared its latest payout on Tuesday, has been a little better. The company boosted its dividend twice in the past year, and will be dispensing $0.30 per share on December 1. That amount matches the previous disbursement, but it's a nice 36% higher than the year-ago payout of $0.22.
Still, it seems investors on the market today want to see more positive and uplifting news than just the maintenance of recent dividends. They're getting tired of hearing about hustles and settlements and layoffs.
