In addition, insurance companies' stocks plummeted -- led by Hartford Financial Services Group
When you talk about nationalization you hear the names Citi and Bank of America as the top two names burning out, said Walter Todd, a portfolio manager at Greenwood Capital Associates, which holds shares of Bank of America.
Bank of America dropped 7 percent to $4.25 on the New York Stock Exchange at mid-afternoon, while Citigroup fell 10 percent to $2.62 after touching $2.50 -- its lowest level since July 1991.
The KBW Financial index <.BKX> fell 3.59 percent to 22.58 after touching a 17-year low.
Last month, Bank of America Corp
Each bank received $45 billion in government aid in recent months and a backstop on toxic assets-related losses, more than their current market value.
The U.S. Treasury is expected in coming weeks to subject up to 25 banks with assets exceeding $100 billion each to stress tests to decide which banks need additional capital.
And support for nationalizing troubled banks seems to be growing. Republican Senator Lindsey Graham has said nationalization could be an option, while former Federal Reserve Chairman Alan Greenspan said government intervention could be the least bad alternative left for policymakers.
People are afraid of the government at this point. The market is selling off on the lack of information. Tell us something, please, said Anton Schutz, president of Mendon Capital.
Investors' fears also hit insurers stocks, with the KBW Insurance index <.KIX> down 3.65 percent to 58.05.
Insurance companies have massive investment portfolios that fund their ultimate liabilities. As markets were hurt on Thursday, investors grew concerned that insurers' investment portfolios would be hit.
Today seems to be 'Sell Everything Financial,' Schutz said.
American International Group's
(Reporting by Juan Lagorio, editing by Matthew Lewis, Richard Chang)