Banking stocks fell Monday after a report surfaced that Federal Reserve Chairman Ben Bernanke will lay out plans this week to tighten credit at banks in coming months as the economy rebounds.
The KBW Bank Index fell 1.47%, to 44.14.
Most large and midsize banks on the 24-bank KBW index fell after The Wall Street Journal reported Monday that in the months ahead Bernanke will entice banks to park more funds at the Fed by raising the interest it pays on excess reserves from 0.25%. That would tie up money banks could lend out, raising the price of credit and curbing demand for credit.
Bernanke is scheduled to testify Wednesday before the House Financial Services Committee.
In other regulatory news, James Bullard, the president of the Federal Reserve Bank of St. Louis, said in an interview with Reuters that the Fed may sell assets in the second half of the year, and that it will end its mortgage-backed securities buying program by the end of March.
It was a down day for large and regional banks.
Bank of America Corp. fell 3.47%; JPMorgan Chase & Co., 1.57%; Wells Fargo & Co., 3.61%; and Citigroup Inc. fell 7 cents, to $3.15.
In regional banking, BB&T Corp. fell 1.38%; Capital One Financial Corp., 2.06%.; KeyCorp, 1.02%; M&T Bank Corp., 1.9%; and PNC Financial Services Group Inc., 2.01%.
The Dow Jones industrial average fell 1.04% and the Standard & Poor's 500 index fell 0.89%.
