Bank Stocks Are Bad, but Big Failures Unlikely

Regional banks will begin reporting earnings on Tuesday, and the market is primed for more bad news following a rash of recent dilutive moves by cash-hungry lenders.

Equity infusions of $7 billion apiece for Wachovia(WB Quote) on Monday and Washington Mutual(WM Quote) last week exemplify the challenges banks face with rising risk during the credit crunch.

But while dilutive actions like new stock issues and dividend cuts make banks an unattractive investment at the moment, an analysis by TheStreet.com Ratings suggests the industry's woes are not likely to lead to the worst fears of some industry observers -- the prospect of a major bank failure. ...