Bank stocks fluctuated to close down Wednesday as speculation swirled in the late afternoon that the federal government would nationalize Bank of America Corp. and wipe out shareholders.

The KBW Bank Index fell 1.48%.

Cassandra Toroian, the president and chief investment officer of Bell Rock Capital LLC in Rehoboth, Del., said investors are wary that the government would either convert its $45 billion in preferred shares into common shares or deem the Charlotte company's other preferred shares worthless. "But that's just not going to happen," she said.

B of A's stock fell as much as 12%, to $4.66 a share Wednesday, going below $5 for the first time since October 1990. It closed off 11.3%, at $4.70. In other news reports Wednesday, B of A is selling three corporate jets and a helicopter that it acquired when it bought Merrill Lynch & Co. Inc.

The company also naming Ki Myung Hong as president of its Asia-Pacific operations, succeeding Nelson Chai, an ally of John Thain, Merrill's former CEO who was ousted by B of A on Jan. 23.

Moreover, B of A's CEO, Kenneth Lewis, told employees in a Feb. 2 memo that the company's board supports his management team and strategy and that January's results were "encouraging," according to news reports.

Company officials confirmed the selling of the aircraft and the appointment of Mr. Hong but would not confirm Mr. Lewis' memo.

Further, they said, B of A "cannot comment" specifically on the speculation about nationalization.

Ms. Toroian said that bank stocks also fell amid speculation over how the government would change the capital structure for all the banks participating in the Capital Purchase Program "and how they are the going to get off of the government's dole."

Goldman Sachs rose 6.2%, and Ms. Toroian said this was because the New York company's chief financial officer, David Viniar, reiterated at an investor conference that, as soon as the capital markets pick up again, it would raise money and repay the $10 billion it received from the Treasury Department.

President Barack Obama announced Wednesday that top executives at companies that receive "exceptional" assistance from the Treasury Department would not be allowed to earn more than $500,000 a year. Any amount over that would have to be placed in restricted stock that would not vest until the company repays the Troubled Asset Relief Program funds. Next week, the Obama administration is expected to disclose fully its plan to rescue the financial sector.

Uncertainty about the government's plan for the banking industry dragged down the broader markets as well. The Dow Jones industrial average was off 1.51%, and the Standard & Poor's 500 index fell 0.75%.

Huntington Bancshares Inc. fell 20.4%. On Tuesday, the Columbus, Ohio, company said that it was cutting 500 jobs, or about 4% of its work force, eliminating 2008 bonuses, and stopping its 401(k) matching program.

Other decliners Wednesday included JPMorgan Chase & Co., off 0.04%; Wells Fargo & Co., 4.1%; Fifth Third Bancorp, off 25 cents to $1.54; and Regions Financial Corp., 4.2%.

Gainers included Citigroup Inc., up 0.9%; U.S. Bancorp, 0.4%; and Bank of New York Mellon Corp., 1.3%.

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