The WSJ says that Comptroller of the Currency John Dugan acknowledged

tough times for U.S. banks, with 702 banks—nearly 9% of the industry—defined as troubled. He told bankers that regulators "simply cannot turn a blind eye" to problems and have learned the lesson that looking the other way will only compound losses.

Nearly 200 U.S. banks have failed in the past two years, at a cost of nearly $58 billion, "and we may not be even halfway through," said Mr. Dugan.

So, why are financial stocks, including banks doing so well?