At the BancAnalyst Association of Boston's annual conference, the CEO of BB&T bank said that "this is the best buying opportunity you will ever have for bank stocks in years".

I don't only agree, I am convinced that recent broker downgrades of some of the nation's best banks make a strong case for why the stocks are buys.

Here how analysts operate;

Since their largest paying clients are hedge funds and mutual funds whose performance results are scrutinized monthly, analysts only issue buy recommendations on stock they think will perform immediately, or over the next month or two.

Putting it another way, analysts are not value investors, they are traders.

Buy recommendations with price targets out 12 months are a joke. In order to be ranked highly by institutional clients in "Institutional Investor" analysts must come up with hot picks that will perform now.

Why?

Sell-Side analyst’s compensation is often tied to rankings in "Institutional Investor", and the financial rewards are greater if an analyst is placed on the magazines "All-American Research Team".

According to a survey by Institutional Investor, analysts who earned top spots on the "All-American Research Team", “made $1.4 million in 2006, which is 2.4 times higher than the average pay for all senior analysts".

In the June 30, 2007 reporting period, Warren Buffet purchased 8,700,000 shares of Bank of America (BAC). I am willing to bet the next report we receive will reveal that Buffett added to his bank holdings during this recent pullback.

I believe investors with a 2-3 year time horizon will be amply rewarded once the bad news in the banking industry ends. When banks begin to announce good news, and the stocks are up 20-30% from current levels, analysts with 2-3 month time horizons will jump back on the band-wagon.