Updated from 12:38 p.m. EST
Bank stocks rebounded from multiyear lows on Friday, as comments made by the White House seemed to reassure investors that the Obama administration was not considering nationalizing troubled banks.
The crisis of confidence continued on Friday. For the third day in a row, the sector was hammered, helping to drag the
Dow Jones Industrial Average
to multi-year lows, as investor concerns ricocheted between
to the potential inadequacy of the Obama administration's plans to save the struggling sector and boost the economy.
Two of the sector's largest banks --
Bank of America
were particularly hit hard on Friday.
Charlotte, N.C.-based BofA plunged as much as 36% before rebounding. It closed down 3.6% to $3.79. Citi fell 27% to below $2 before recovering down 22.3% to $1.95. The stock was most recently trading down 19% to $2.04.
Positive comments from the White House caused some bank stocks to move into the black by late afternoon.
White House press secretary Robert Gibbs said the Obama administration continues to "strongly believe" that a properly regulated, privately held banking system "is the correct way to go."
"That's been our belief for quite some time, and we continue to have that," Gibbs said, according to The
Both companies have denied the speculation that either would need to be nationalized, citing strong capital levels.
Other banks also improved somewhat.
was most recently down 9%,
, down 2.8%;
, down 3.4%; and
, rose 6.1%.
BofA is struggling to digest its acquisition of
, completed on Jan. 1. Investors and regulators are concerned regarding the depth of losses associated with Merrill Lynch's capital markets business. Merrill was forced to take billions in losses related to writedowns on securities backed by troubled mortgages. The company, which also bought
last summer, has received two capital injections from the U.S. Treasury's Troubled Asset Relief Program, or TARP, totaling $45 billion.
Citi also has been bailed out by the government twice in the last quarter of 2008. Citi has received $45 billion through TARP as well as the federal government backing some $300 billion in assets.
that CEO Ken Lewis has been subpoenaed by New York State Attorney General Andrew Cuomo in an investigation over bonuses paid to Merrill Lynch employees at the end of last year -- before the deal was completed.
Cuomo's office is trying to determine if investors were misled about the depth of Merrill's losses in late 2008 and whether details of the bonuses to Merrill employees, contained in a nonpublic document, should have been disclosed to investors, according to the
Wall Street Journal