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Financial Stocks Roundup: Bank of America Bulls and Bears Have a Public Catfight


With 95% of analyst ratings on stocks positive, few are worth buying, says Mike Mayo, who isn't winning many friends with his opinion.

The big banks booked modest losses today after first quarter GDP estimates trailed expectations. The Financial Sector Select SPDR ETF (XLF) is underperforming the S&P 500 (^GSPC).

Just as Citigroup's (C) investors stonewalled plans to increase executive pay, Credit Suisse (CS) and Barclays (BCS) shareholders are also rebelling against high executive pay and seeking more of the loot for themselves in the form of dividends.

MetLife (MET) is suing Morgan Stanley (MS) for fraud. MetLife is seeking $757 million over mortgage-backed securities that the investment bank sold it in the mid-naughts. MetLife's complaint says that it was told that the securities were accurately appraised, but as we now know, many of those MBS's turned out to be worthless.

"In truth, and as MetLife and the world would only later discover, the originators whose loans collateralized the Morgan Stanley RMBS at issue were among the worst of the worst culprits in the subprime lending industry," Metlife said in a statement.

The Wall Street Journal's Deal Journal blog highlighted a war of words between two of the best-known bank analysts. The idiosyncratic, colorful Dick Bove fired off a very brief report aimed at debunking "a sell report from a prominent analyst on Bank of America (BAC)." The "other analyst" is most certainly the equally outspoken Mike Mayo. Mayo is an experienced analyst and a famous Bank of America bear. His book Exile on Wall Street explains why less than 5% of stock ratings by professional analysts are negative.

Mayo recently issued a sell rating on Bank of America, saying that the first quarter is "likely as good as it gets." Bove, in his note, went on to point out some of BofA's latest stats. The bank's stock did shoot up by 49% since the beginning of the year (just a few basis points behind Apple (AAPL)!).

Bove says, "My confusion lies in the fact that if this is a Sell, what is a Buy?"

Wells Fargo (WFC) agreed to buy Merlin Securities, a prime brokerage that clears trades for hedge funds and other clients. This marks Wells' first experiment with prime brokerage.

A disabled woman was arrested last night for delivering a payment by hand to a Wells Fargo executive in San Marino, California, as about 100 people protested outside. Ana Casas, who has cerebral palsy, missed a few mortgage payments after she was diagnosed with breast cancer. She is facing eviction after her home was foreclosed and her family was denied a loan modification. She broke a city ordinance that keeps protesters 150 feet away from residential houses that they target, and drove her motorized cart right up to Wells Fargo executive Tim Sloan. The Pasadena Star has the full story.

Twitter: @vincent_trivett
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