NEW YORK ( TheStreet) -- Stocks fell steeply Monday as Bank of America and other U.S. banks suffered a regulatory setback and the future of the European Union became more uncertain.
European Union finance ministers have agreed to come up with an additional €150 billion in funding for the International Monetary Fund to help tame the debt crisis, but this is short of the €200 billion originally agreed upon.
On Monday, European Central Bank President Mario Draghi said that substantial downside risks remain for Europe's economy and again threw cold water on any hopes for the central bank to step in with any relief. The European Central Bank has repeatedly denied that it will expand its role, including buying up more government bonds, to help troubled nations in the crisis."People have to accept that we have to, and always will, act in accordance with our mandate and within our legal foundations," said Draghi earlier to the Financial Times. The euro remains at an 11-month low as investors worry that potential downgrades on sovereign debt of core eurozone nations will lead to further defaults. Three major ratings agencies have sounded warnings on the region's economic future and credit outlook. Last week, Fitch Ratings cut its outlook for France's credit from stable to negative although the country remains triple-A rated. Germany's DAX lost 0.5%, while London's FTSE slipped 0.4%. Losses in financial stocks also pulled the U.S. market lower. The Federal Reserve is expected to accept rules from regulators in Basel, Switzerland that will require bigger capital buffers for big U.S. banks, according to a recent story from the Wall Street Journal. JPMorgan Chase (JPM), Citigroup (C) and Bank of America (BAC) would all land in the bucket. Shares of the firms were down 3.7%, 4.7% and 4.1%, respectively. Bank of America, notably, had fallen below the psychologically significant $5 mark. Meanwhile, Caterpillar (CAT), Pfizer (PFE) and Merck (MRK) were the only three of 30 components on the Dow that settled in positive territory.
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