Senator Elizabeth Warren is a lefty populist in the pocket of big labor, so she is going to be hard on big banks (occasionally with justification). However, during her first appearance at a hearing, as a member of the Senate Banking Committee, it is interesting to note that she glosses over an important reason why big banks may be selling below book value.
During a question she posed, Warren pointed out that bank assets may be of lesser value than actually listed on the books (banks could be dishonest is the way she put it, although book value can differ from real value for many corporations---not having anything to do with dishonesty). She then stated that the only other reason she could think of that banks trade below book value is that the banks may be too complex to understand and manage. This may be the case to some degree, but there is another reason banks may be trading at low levels relative to book value and that is regulatory risks banks face, especially from someone like Warren, who was instrumental in getting the Consumer Financial Protection Bureau up and running and who now sits on the Senate Banking Committee, with her extreme interventionist bent.
Who wants to invest in bank stocks when you have Warren on the non-Cherokee war path? Who wants to invest in banks stocks, when you have Warren suggesting that bank stocks are trading below book value because banks are possibly being dishonest, when in fact they are very likely following generally accepted accounting principles?
Bottom line: Elizabeth Warren may be one very good reason bank stocks are trading below book value and she is either clueless about that possibility or she herself was being dishonest at her first Senate Banking Committed hearing by not bringing up the possibility.
(Note: She asks the question at approximately the 4:25 mark)