Stocks extended losses on Friday, with the S&P down more than 2.5 percent after U.S. Sen. Christopher Dodd said the nationalization of banks is a possibility, according to a Bloomberg report.

* Shares of Bank of America and Citigroup tumbled over 22 percent to session lows on the news.

* The Dow Jones industrial average <.DJI> slipped 180.80 points, or 2.42 percent, to 7,285.15. The Standard & Poor's 500 Index <.SPX> tumbled 20.26 points, or 2.60 percent, at 758.68. The Nasdaq Composite Index <.IXIC> slid 18.75 points, or 1.30 percent, to 1,424.07.

(Reporting by Rodrigo Campos; Editing by Leslie Adler)