Bank of America Corp. shares on Monday fell to levels not seen since May 2009 as concerns about the need for more capital at big banks and the economy rattled Wall Street.
The Charlotte bank's shares fell nearly 4 percent to $10.83, contributing to a decline in the Dow Jones industrial average of 61.30 points, or 0.5 percent. The Charlotte bank's shares remain well above a low of $3.14 in March 2009, but far below an all-time high of nearly $55 in November 2006.
Among large banks, Citigroup Inc. suffered the biggest decline Monday, with its shares falling 4.5 percent to $38.07. Wells Fargo & Co. shares dropped 2.2 percent to $26.26.
Analysts said bank stocks are suffering in the wake of a speech Friday in which Federal Reserve Board Gov. Daniel Tarullo discussed enhanced capital requirements for banks. In his remarks, he said banks could be asked to carry more capital based on their potential impact on the financial system if they failed.
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"We have a highly politicized environment bringing with it a good deal of concern, and it continues to weigh on bank stocks," said Gary Townsend, chief executive of Hill-Townsend Capital, a Maryland-based investment firm.
Townsend said he believes bank stocks are as "cheap as they can be," but investors remain nervous about the sector. Sharp comments by administration and Fed officials aren't helping in a time of economic uncertainty, he added. The government reported Friday that the economy created fewer than expected jobs in May.
Banks need to keep sufficient capital on hand as a cushion against unexpected losses. In the wake of the financial crisis, new global standards will require them to hold even more over time. If capital rules are strengthened further, banks might have to resort to issuing new stock, which dilutes the holdings of existing shareholders.
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