In 2008, a famously wealthy man bet big on Bear Sterns, citing that it was absurd that it was trading below book value. That man is now only slightly wealthy. The lesson was that you should trust book value as a floor on valuation only if you're sure of the quality of underlying asset values.
Now, apparently, Citi and BofA are trading at half of book value. Yet since 2008, bank capital requirements have supposedly made the banks much stronger. I must conclude that investors are questioning the valuation of these banks assets.
From WSJ article titled J.P. Morgan CEO Jamie Dimon Buys 500,000 of Bank’s Shares
Citigroup and Bank of America now trade for about half their book value, a level last seen in late 2012.
Are there particular assets that are causing these two banks to be valued lower relative to their book values than the other banks? Or is it a residual loathing based on their being the biggest losers of 2008 that are still around today? Are there any hard numbers to back up this devaluation?