Shares of credit card companies fell through the floor Wednesday on news that the federal government is suing Visa and Mastercard.

The Justice Department specifically cited the exclusive relationship Visa and Mastercard have with banks.

Already jittery investors were clearly unnerved by the legal action and stampeded out of major credit card banks and other issuers. Many of the stocks were quickly hammered to 52-week lows.

Shares of the Capital One Financial Corp. plunged $18 to $67; Providian Bank Corp. dropped $10.125 to $53.1875; and Metris Co. slumped $4.75 to $17.75.

Defying the storm, investors in MBNA Corp. mostly stood by the monoline credit card company after the company met analysts' earnings estimates and announced better-than-expected revenues. MBNA's shares fell only $1.25 to $15.

In contrast to the whirlwind that hit bank-related card stocks, shares of American Express rallied on news of the Justice Department's move. American Express rose $2.50 to $73.25 in a down market.

"Vigorous competition among credit card networks is critical to ensure that consumers have the benefit of the best payment methods, particularly as more and more commerce is conducted through credit cards and electronic forms of payment," according to Joel Klein, the Justice Department's antitrust chief.

If the government prevails, American Express will be the big beneficiary, investors apparently reasoned.

Credit card industry analyst Michael Granger of Fox-Pitt, Kelton Inc., New York, asserted that investors were overreacting to the development.

"This is not really news," said Mr. Granger. "This is only a new development in a very old story. This is an issue, but not enough of an issue to knock almost 30% off of your stock price."

Meanwhile, bank stocks in general stumbled yet again Wednesday after Federal Reserve Chairman Alan Greenspan offered a less-than-glowing appraisal of the U.S. economy and global markets.

Speaking before the National Association of Business Economics, Mr. Greenspan said the outlook for the U.S. economy in 1999 "has weakened measurably" since the troubles in Russia surfaced.

But the Fed chairman typically hedged himself by adding that the possibility of a recession in the U.S. was largely overstated.

The Standard & Poor's bank index plunged 3.30%, outpacing the Dow Jones industrial average, which fell 0.02% The Nasdaq Bank index declined 3.14% and the S&P 500 sagged 1.41%.

The biggest losers of the day included Citicorp, down $5.1875 to $79.8125; J.P. Morgan & Co., down $4.50 to $74.50, and Bankers Trust Corp., off $4.125 to $49.8125.

Also dragging bank stocks down was Lehman Brothers Inc., whose industry analysts downgraded 15 of them.

In a note to clients Wednesday, Diane Glossman and Michael Plodwick said it had been necessary to "stress-test" their earnings estimates for banks in case of a recession.

Lehman has taken a cautious view of the economy, said the analysts.

Although Lehman wrote that it believes that "the Federal Reserve Board will undertake a much more aggressive pattern of easing (interest rates) in the months ahead, they are uncertain this will ward off a potential recession in the U.S. economy in 1999."

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