A Contrarian Case For Financials Or Wishful Thinking?

Every time an asset class, or a sector, gets beaten down and becomes nearly universally hated, a value investor should take notice. Being hated, of course, is not a reason in and of itself to buy anything; after all, a value investor buys value, not hate. Nonetheless, sometimes those two go hand in hand, and the former can be a good precursor for the latter.
So - what about those financial stocks? They have been halved in price as a group, their trailing valuations look good, and they seem to be unable to do anything right at the moment:

The case against them is clear-cut: nobody knows how much assets will have to be written off, how deep the losses are going to end up being, and how much regulation all the closers-of-the-barn-doors-after-the-horses-bolted are going to throw at the financial companies after the fact. The thing is, though, that at this point everybody knows this. So, the question becomes: how much is this common knowledge already reflected in the prices? Is the anticipation of the worst already pushed these stocks to prices that are low enough for every piece of bad news short of bankruptcy? Or are losses going to be even bigger than most imagine at the moment?
Right now financials certainly look like a proverbial falling knife, but as they continue their downward trajectory I will be watching them closely.
P.S. The above does not apply to REITs. I believe REITs as a group need to fall another 30 to 50 percent to become attractive again.

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