Economic Growth and Dividend Expansion Will Lead Banks Higher

Another week, another issue for the US banking industry. This weekend, it was news from Wells Fargo (WFC), Bank of America (BAC) and Citigroup (C) that losses from litigation related to mortgages made during the housing boom may lead to greater losses than the banks are currently provisioned for. The numbers are based on a total, worst case scenario, which must be disclosed due to a new SEC filing. While the headline of this story makes it a potential negative for banking shares this week, I believe investors who look past the headline will find shares of the large U.S. banks [ I am including Morgan Stanley (MS) and Goldman Sachs (GS) in this category, since they are now bank holding companies] to be attractive due to the steep yield curve, expanding U.S. economy, increasing return of capital to shareholders, and a desire by the federal government to see banks... Read more