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Bank Sell-Off Puts Premium on Regulatory Fears

NEW YORK (TheStreet) -- Over the past month, the six biggest bank stocks have lost an average of 13%, seemingly on fears of what effect new, yet-to-be-determined regulations will have on their profitability.

Wells Fargo (WFC) shares have lost the least value, with a decline of 8% since Jan. 8, closing at $26.43 on Monday. Morgan Stanley (MS) was the loss leader, with an 18% decline, dropping to $26.60 by Monday's close. Citigroup (C), Goldman Sachs (GS), Bank of America (BAC) and JPMorgan Chase (JPM) were somewhere in between, all with double-digit declines.

The sell-off gained momentum roughly around the time JPMorgan announced fourth-quarter results on Jan. 15. Revenue was disappointing, and management comments about the road ahead weren't as sunny as some had hoped.

Then came the Obama plan, which turned into the Volcker rule, which hasn't yet been drafted and doesn't seem likely to get far beyond the Congressional hearings held last week.

Senate Banking Committee Chairman Chris Dodd (D., Conn.), who is trying to get a broad reform bill passed before he hangs up his legislative hat, grumbled about Obama's attempt to slip in the Volcker measure while he's having trouble passing the original proposal.

"It's not a movable feast," Dodd told Volcker after the hearings had ended, according to the New York Times. "It's adding to the problems of trying to get a bill done."

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