) -- Escalating foreclosure issues dominated the headlines as well as investors' concerns.

Bank stocks wobbled this week after

JPMorgan Chase

(JPM) - Get Report

reported better-than-expected earnings, but the numbers were boosted by lower provisioning and reserve releases. Additionally the sector declined following expanding foreclosure issues. State officials this week announced a nationwide probe into bank foreclosure practices. The

Financial Select Sector SPDR

dipped more than 2% this week.

Bank of America's (BAC) - Get Report

stock plunged to a new 52-week-low of $11.74 during intraday trading on Friday following a report by hedge fund Branch Hill Capital that argued the big Charlotte-based bank had as much as $74 billion in exposure to mortgage-security buybacks from

Fannie Mae



Freddie Mac





notorious ex-CEO Angelo Mozilo settled with the

Securities and Exchange Commission

over a civil fraud and insider trading case on Friday. Mozilo agreed to repay $45 million of profit made and another $22.5 million in civil penalties, the SEC said.

The SEC alleged in a June 2009 lawsuit that Mozilo and two other executives at Countrywide (which was bought by Bank of America in 2008) "failed to disclose to investors the significant credit risk that Countrywide was taking on as a result of its efforts to build and maintain market share."

The civil suit also accused Mozilo of using inside information to begin unloading his massive stake in the firm under the pretense of pre-arranged trading plans known as 10b5-1 plans.

Known as the poster child for the subprime mortgage meltdown, Countrywide was one of the top subprime mortgage lenders as the financial crisis began - something that BofA is still paying for these days.

JPMorgan kicked off bank earnings season on Wednesday reported quarterly profit of $4.4 billion, or $1.01 a share, topping Wall Street estimates. However, JPMorgan was not able to escape lower revenue in the investment bank as well as continued challenges related to mortgages.

"The review of customer businesses at JPMorgan Chase, division by division, is relatively favorable. They suggest forward momentum at the company," Rochdale Securities analyst Richard Bove writes in a note Thursday. "However, other issues related more to weak markets in investment banking; continued problems with mortgages originated in the past; and continued high levels of non-compensation spending hurt core earnings in the quarter."

Bove continued: "It could be that the company resorted to 'back-in-the-day' techniques to get through this quarter in the expectation that future quarters would show solid core growth in results. It would seem to be the case."

Elsewhere in the financial services sector,

TCF Financial (TCB)

took a stand against the man this week when it decided to file a lawsuit against the

Federal Reserve

. In the lawsuit, the regional bank said that financial reform measures that call for limitations to debit card interchange fees under the so-called Durbin Amendment are "unconstitutional," and offers advantage to small community banks that are exempt from the rule.

Financial Week Ahead

Bank earnings season hits in full force with


(C) - Get Report

reporting third-quarter earnings on Monday; Bank of America on Tuesday and

Wells Fargo

(WFC) - Get Report

reporting on Wednesday.

Read more:

Wall Street Whispers: All Bark, No Bite>>

--Written by Laurie Kulikowski in New York.

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Laurie Kulikowski


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