Bank stocks fell Wednesday, dragged down by Standard and Poor's downgrades and the Obama administration's unveiling of its massive regulatory overhaul.
The KBW Bank Index fell 3.29%.
Late Tuesday, the Treasury Department began circulating an 85-page white paper with the details of the administration's proposal for regulatory reform, including granting sweeping new powers to the Federal Reserve Board, creating a consumer protection agency and eliminating the Office of Thrift Supervision. President Obama formally announced the proposal Wednesday afternoon.
"The proposal that has finally come out has certainly weighed in on bank stocks," said Gary Townsend, the CEO of Hill-Townsend Capital LLC. "Investors are cautious, and it's enabled some to take some money off the table, and it probably encouraged some short selling as well."
Bank stocks were also dampened after Standard & Poor's cut the counterparty credit ratings of 18 banking companies, including Wells Fargo & Co., which fell 5.4%; U.S. Bancorp, 0.5%; BB&T Corp, 2.9%; Capital One Financial Corp., 2.9%; Fifth Third Bancorp, 5.2%; KeyCorp, 7.8%, and Regions Financial Corp., off 26 cents a share, to $3.99.
Other decliners included JPMorgan Chase & Co., off 2.3%, Bank of America Corp. 3.4%, PNC Financial Services Group Inc. 3.6% and Citigroup Inc. down 17 cents, to $3.08 a share.
The Dow Jones industrial average fell 0.09%, and the Standard & Poor's 500 index, 0.14%.