Citigroup Inc. and Bank of America Corp. tumbled to 13-year intraday lows Thursday before erasing some of those declines as gloomy economic reports exacerbated general market fears and investors contemplated changes to the Treasury's bailout plan.
Separately, Citigroup's board issued a statement signaling support for its chairman, Sir Win Bischoff, after reports surfaced about tension among the bank's directors.
Citigroup shares were recently down 6.4%, or 59 cents, to $9.05, after closing in the single digits for the first time in 12 years on Wednesday. Bank of America dropped 2.2%, or 38 cents, to $16.62 after having fallen as much as 13% earlier Thursday, and losing 9% the day before.
U.S. Treasury Secretary Henry Paulson on Wednesday signaled the department is gearing up to enter the second phase of its $700 billion bailout plan and that it's likely to scrap the original proposal to buy up troubled assets from the balance sheets of banks. Investors had been hoping that the Treasury's purchase of troubled assets would free large banks from their dead weight.
Citigroup spokeswoman Shannon Bell said Paulson's announcement wouldn't change their plans.
"The details of the TARP investment program were not fully finalized; as such we had no specific plans to utilize the program for asset purchases, and therefore the changes yesterday do not affect Citi," she said.
Bank of America couldn't be reached immediately for comment.
Meanwhile, Citigroup on Thursday signaled its continuing support for Bischoff in response to a Wall Street Journal report citing people familiar with the matter that indicated some board members were weighing Bischoff's removal.
"The Board of Directors of Citigroup Inc. today reiterated its full support for the company's chairman, Sir Win Bischoff, and said it looks forward to his continued leadership," Citi said in a statement. "This morning's Wall Street Journal report to the contrary is completely erroneous."
The overall economy took another hit Thursday when weekly claims for state unemployment benefits rose much more than expected.
Initial claims for jobless benefits jumped 32,000 to a seasonally adjusted 516,000 in the week ended Nov. 8, the Labor Department said Thursday. That is the highest since Sept. 29, 2001. Economists surveyed by Dow Jones Newswires had expected claims to rise only 4,000.
Rising unemployment numbers could pressure loan delinquencies higher and broader recessionary figures could push more commercial loans into default.