Financial Stocks Trading Near Book Value

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Includes: BAC, BSC, C, CFC, GS, JPM, LEH, MER, MS
by: Felix Salmon

It's not just Bear Stearns which is trading below book value. Here are some closing prices from Yahoo Finance:

Bank Price/Book
Countrywide 0.19
Bear Stearns 0.73
Wachovia 0.74
Citigroup 0.93
JP Morgan Chase 1.06
Lehman Brothers 1.12
Bank of America 1.15
Morgan Stanley 1.44
Merrill Lynch 1.53
Goldman Sachs 1.60
Click to enlarge

Can someone explain to me why it makes sense for Merrill Lynch to be trading on twice the price-to-book ratio of Bear Stearns?

Disclosure: Author has no position in stocks mentioned.