Money Center Banks / BAC

Remember the negative divergences this week in BAC? As is often the case, we can see what is going on, but usually don't find out why until later.

We found out why today.

Bloomberg Reports:

Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. were sued by New York Attorney General Eric Schneiderman over the creation and use of a mortgage database.


The banks’ use of the database, known as MERS, has led to deceptive and fraudulent foreclosure filings in New York state and federal courts, Schneiderman said in a statement today.


“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages,” the attorney general said. “Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions.”




So where does this leave the foreclosure settlement? Probably a moot issue now as the NY AG just set the precedent. 


I suspect Wall Street didn't just find out today that this was a likely outcome. Here are the charts of the 3 major money center banks named in the initial suit.

 BAC

 JPM, looks a lot like BAC doesn't it?

And WFC


All 3 are off their highs, we'll see if they drag financials lower, it's still early.