Congress' move to tax employee bonuses paid by some bailout recipients spooked investors Friday, keeping bank stocks in negative territory.

The KBW Bank Index fell 4.96% for the day but rose 1.76% for the week.

Jacqueline Reeves, the managing director of Bell Rock Capital LLC, said investors had reservations about the sector after the House passed a bill late Thursday to apply a 90% tax rate to certain bonuses paid by companies that received $5 billion or more under the Troubled Asset Relief Program. The legislation was a response to the $165 million of bonuses paid recently to managers in the financial products division of American International Group Inc., which has accepted more than $170 billion of bailout money.

"The underlying concern — even though there is talk that the bill won't make it completely to passage — is that it would have ripple effects through banks and brokerage houses, in terms of talent leaving and moving to other companies that have not received Tarp," Reeves said.

"And there's also the concern that potentially, the good banks would be driven to pay back Tarp as soon as possible," she said. "Even though they didn't need it, the money could have facilitated additional lending, so does that really assist the economy?"

Frank Barkocy, the director of research at Mendon Capital Advisors Corp., said investors were also disappointed that the Treasury Department did not provide additional light on how it was going to deal with the industry's troubled assets.

JPMorgan Chase & Co. fell 7.2%. Bank of America Corp. fell 10.7%. Citigroup Inc. rose 2 cents, to $2.62. Wells Fargo & Co. fell 9.3%, and U.S. Bancorp fell 5.9%.

Among regionals, Comerica Inc. fell 4.9%. PNC Financial Services Group Inc. fell 6.1%, and SunTrust Banks Inc. fell 4.8%.

The Dow Jones industrial average fell 1.65%, and the Standard & Poor's 500 fell 1.98%.

The Federal Deposit Insurance Corp. said Friday in its amended Quarterly Banking Profile that the industry's fourth-quarter net loss was actually $32.1 billion, versus the $26.2 billion originally reported. The industry's full-year net dropped 37%, to $10.2 billion.

The FDIC attributed the change to higher charges for goodwill impairments reported just after the original version of its quarterly report was published Feb. 26.

Citi said Friday that it had promoted Edward "Ned" Kelly, its head of global banking, to chief financial officer. He succeeded Gary Crittenden, who was named the chairman of Citi Holdings, the entity created in January for its noncore assets.

Wells said Friday that it had made $51 million of loans or loan commitments in January, bringing the amount extended to customers in a four-month period to $144 billion, or nearly six times the $25 billion of capital the San Francisco company received from the government.

The FDIC closed Thursday on the sale of the failed IndyMac Bank to OneWest Bank in Pasadena, Calif.

OneWest acquired $20.7 billion of IndyMac assets and all $6.4 billion of its deposits and will share in any losses on its mortgage portfolio.

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