BofA and Citigroup the real 'Bad Banks'

'Bad Bank' hopes and dreams can't escape the reality of investing in U.S. Financials, after a big run yesterday the gains are being erased today with BofA (NYSE:BAC) and Citigroup (NYSE:C) leading the plunge.

However it could be much worse, BAC and C are only down 5% and change:

Bank of America (BAC), Boeing (BA) and Citigroup (C) are posting the Dow's heaviest losses.  Good for them, no big change there except for yesterday's rally.

Reality returned to Wall Street today as weak earnings reports and record unemployment claims offered the latest evidence of the economy's struggles.

Expectations have grown that the Obama administration will create a "bad bank" to clean all the toxic debt off the financial sector's balance sheets.  Here's what our new money will look like:

Speculation about such a plan, raising hope that financial institutions could eventually emerge from the welter of bad loans that have weighed them down, caused share prices of banking companies to surge, pushing the overall stock market up sharply yesterday.

Wednesday's hope of the U.S. government creating a way to remove bad debt from banks' books is just that, hope. 

You can't make any long term investments based on hope, the market is all about taking the gains one day at a time in 2009.

The trades to be made today are the FAZ and SKF, and with these ETFs its all about timing, just playing the short term rallies:

So the real 'Bad Banks', well that crown goes to Citigroup and Bank of America, let's throw a few more billion dollars at them on the tax payer bill, that should solve it.