Big banks aren't looking so pretty

Big year for big banks?
Big year for big banks?

Warren Buffett's favorite bank was the top dog in the industry in 2014. Will that happen again this year?

Shares of Wells Fargo (WFC), the largest holding of Buffett's Berkshire Hathaway (BRKB), surged more than 20% in 2014. It is on tap to report its fourth quarter earnings later this week.

What Wells has going for it is that it has the least Wall Street exposure of the mega banks. It is more about traditional banking -- lending and taking in deposits. And it's a powerhouse in the mortgage business.

That means that Wells Fargo isn't as tied to the market and trading revenues as other big banks.

The fourth quarter appeared to be a tough one for the major financial firms.

Related: Get ready for a tale of two earnings seasons

In early December, the CEOs of both Bank of America (BAC) and Citigroup (C) said that trading revenues were weak in the quarter. Both companies will report their results this week. Goldman Sachs (GS) and JPMorgan Chase (JPM) are on tap to do so as well.

And just last week, Citi said that it was cutting the bonuses of some of its traders. So it will be very interesting to see if BofA, Goldman and JPMorgan also pull back on bonuses.

Stronger economy and market turmoil is a plus. Now there is good news for the banks.

The improvement in the U.S. economy -- combined with a continuation of low interest rates -- should lead to increased demand for mortgages, credit cards and other kinds of bank loans.

So it will be encouraging if JPMorgan Chase CEO Jamie Dimon and other big bank executives tout the continued rebound in the job market and broader economy during their earnings calls.

The wackiness in the broader markets could also help the trading businesses of the big Wall Street banks. The first week of trading has been anything but stable, with plunging oil prices leading to a big pullback in stocks before reassuring comments from the Federal Reserve sent stocks back up again. Calm markets are the enemy of brokerage desks.

Related: Are bankers really less honest than others?

Analysts from research firm Keefe, Bruyette & Woods said in their 2015 preview report last month that they are predicting more volatility this year. And that's a big reason why they are bullish on most of the big bank stocks.

Still too risky? But the threat of more regulation could be a problem for many of the bank stocks.

It's true that the banks have been winning some battles in Washington lately.

Banks win in government spending bill
Banks win in government spending bill

Congress passed a bill last month that will let banks continue to engage in the trading of risky assets known as derivatives in-house. That move undoes one of the big parts of the Dodd-Frank Wall Street reform law that was set into place in the wake of the 2008 financial crisis.

And the Fed also agreed last month to delay another part of the law, a component of the so-called Volcker Rule that requires banks to sell their hedge funds and private equity stakes. They now have until 2017 to do so.

However, the banks are still targets for many regulators and politicians who want to break up the so-called Too Big To Fail banks. Senator Elizabeth Warren certainly isn't backing down.

Related: Elizabeth Warren is worth millions

If tougher rules are enacted against banks in the coming years, their profits will likely be a mere fraction of what they used to be. And that's why some investors are still reluctant to buy the banks ... no matter what's happening in the broader economy.

CNNMoney Sponsors