NEW YORK (
TheStreet) -- For most of 2011, bank stock investors have asked themselves one question repeatedly as the European crisis deepened. Is this 2008 all over again?
While industry analysts and Wall Street chieftains have made passionate arguments
about how the fundamentals of the U.S. banking system has significantly improved since the financial crisis by almost every metric, jittery investors have not been willing to stick around to find out if that is true.
Bank stocks have suffered their worst decline since 2008 as investors shoot first and ask questions later, with the
SPDR Financial Select Sector
(XLF) shedding nearly 25% year to date. The biggest banks have led the plunge, with the
KBW Bank Index, a basket of 24 of the largest banks, declining 32% year-to-date.
Concerns over exposure to Europe, dismal capital market revenues, a harsher regulatory environment and an unprecedented downgrade of U.S. debt in August assailed the stocks of
Bank of America
(BAC - Get Report),
(C - Get Report) which have shed 60%, 47% and 43% respectively in 2011.
(JPM - Get Report)
(WFC - Get Report)
declined by a lesser extent, falling by 20% and 29% respectively.
Small-cap regional banks fared better, as did credit card companies and mortgage servicers.
All data is as of Nov. 29.
Bank stocks now trade at such deep discounts to historical valuations- many bluechip names trade below their book value- that
few sell-side analysts can bring themselves to say â¿¿sell,â¿ despite the cloudy macroeconomic outlook
>> Why Bank Stock Calls Bombed in 2008: Bove
They maintain that U.S. banks have improved capital levels and liquidity, have fewer problem loans on their books and can navigate a sluggish economic environment by focusing on cost-cutting.
But investor confidence in banks never fully returned in the aftermath of the 2008 crisis and negative headlines emanating out of Europe and the U.S. have not helped.
Investors remain nervous about banks "true" exposure to counterparties in Europe following the failure of
. Banks have tried to improve their disclosure about their exposure to Europe, but investors question the effectiveness of the hedges they have in place and the quality of the disclosures have varied widely.
have downgraded the debt ratings of banks amid concerns over the sovereign debt crisis in Europe and America's own debt problems.
The anti-Wall Street rhetoric has grown louder with the occupy wall street movement, making it less likely that banks will be able to win their battle with Congress over regulations as we head into the Presidential elections.
Meanwhile, banks have also been unsuccessful so far in finding offsets for lost revenues, with their proposals to impose fees on debit card purchases backfiring.
Here are some of the biggest winners and losers in the financial sector year to date, starting with
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts