Updated from 12:51 p.m. ET
Financial stocks were falling sharply Tuesday, after Treasury Secretary
detailed new government initiatives to help the sector.
The KBW Bank Index was declining 13.9% to 26.74, and the
Financial Select Sector SPDR
exchange-traded fund was dropping 10.2% to $8.89.
In a speech in Washington, D.C., Geithner said the Treasury will establish a Financial Stability Trust that would issue a "stress test" for major banks to evaluate potential future losses. Banks with more than $100 billion in assets will be subject to federal supervision and a stress test.
Other provisions include a public-private investment fund that would aid financial firms in shoring up their balance sheets; an expansion of the
previously announced Term Asset-Backed Securities Lending Facility, increased government support for small-business loans and a comprehensive housing program to prevent additional foreclosures.
Geithner also emphasized increased accountability in the use of taxpayer dollars to revitalize the system. "Access to public support is a privilege, not a right," he said.
Dow Jones Industrial Average
Bank of America
was leading the index's decline, falling 19% to $5.56. Fellow Dow members
were also taking losses. American Express fell 10% to $15.97, Citi dropped 15.2% to $3.35 and JPMorgan Chase skidded 9.8% to $24.62.
Spreads on credit default swaps for Citigroup were widening as Geithner outlined his new financial rescue plan, according to a
report. Credit default swaps are instruments that insure an entity's debt against default.
BofA and Citi are the largest participants in the government's existing Troubled Asset Relief Program, having each received $45 billion in equity investments from the government and additional guarantees on their assets.
Among other large financial firms,
was down 7.7% to $90.40.
fell 11.4% to $20.79.
stumbled 14.2% to $16.35.