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— Bank of America Corp.'s shares plummeted 20 percent Monday, leading the financial sector in a downward spiral that was violent even compared to the rest of the crashing market.
Shares of the country's largest consumer bank fell $1.66 to $6.51. Except for a previous swoon in bank stocks in March 2009, it represented a level not seen for two decades.
Other major banks also fared poorly. Citigroup Inc.'s shares fell 16 percent. Shares of JPMorgan Chase & Co. and Wells Fargo & Co., the industry's relative stalwarts, fell about 9 percent.
Investors appeared to be nervous about unresolved issues that linger in the banking industry, including how the banks will handle allegations that they misled investors and borrowers about the health of subprime mortgages leading up to the 2008 financial crisis. They're also dealing with a host of new regulations from the U.S. government and international regulators, which are dramatically reshaping the way the industry makes money.
Monday was also the first day where the market was able to react to Standard & Poor's decision Friday afternoon to downgrade the U.S. debt rating. That decision sent the Nasdaq and the S&P 500 down about 7 percent, and it likely affected investors' outlook on the banks as well. A downgrade of the government's debt rating shouldn't have a direct effect on the banking industry, but it does make investors nervous and will likely make it more expensive for the banks and other U.S. companies to borrow money.
For many, Monday's performance recalled a nosedive in bank stocks two and a half years ago. That was a time when the government hauled bank CEOs to Capitol Hill for questioning, commentators buzzed about possible nationalization and the country's biggest banks still held taxpayer-funded bailout loans.
Over the past three years, Bank of America's stock has fallen 80 percent to $6.51 from $32.25. The KBW Bank Index has fallen 46 percent, to $36.99 from $68.31.
According to SNL Financial, there are only six other days in Bank of America's history where the stock fell more than 20 percent in one day. All were in late 2008 or early 2009, including the day of the Lehman Brothers collapse, when Bank of America's shares fell 21 percent to $26.55.
Nancy Bush, a contributing editor at SNL Financial, noted that Bank of America has raised its capital levels and sold off risky businesses since then.
"They've certainly got issues that they've got to dig through," she said, "but at this point they're more than halfway through the pile."
Bank spokesman Jerry Dubrowski declined to comment on the stock price. But he said the bank "is stronger today than it was a year ago or two years ago."
"There's a lot of work getting done at the company," Dubrowski said, "and we'll continue to focus on that."
