Bank Investors, This Is Going to Hurt

Bank of America's (BAC Quote) sour third-quarter earnings results announced on Monday confirm what may already be obvious for many: Things are getting worse, not better, for banks as the credit crunch passes its one-year anniversary.

Wall Street and the media have been consumed recently, wondering about the ongoing viability of several large banks as investors panicked over the liquidity of financial institutions and overall viability. Beginning next week, with Wells Fargo (WFC Quote) and JPMorgan Chase (JPM Quote) on Wednesday, banks will reveal just how bad earnings for the sector were in the third quarter.

Last month, Lehman Brothers filed for bankruptcy while Washington Mutual was seized by regulators. Just last week, Wachovia (WB Quote) teetered on the brink of failure, before the Federal Deposit Insurance Corp. brokered a deal with Citigroup (C Quote). ...