Updated from 1:51 p.m. EDT

A perfect storm of bad news is punishing bank stocks, with shares of

Citigroup

(C) - Get Report

and

J.P. Morgan Chase

(JPM) - Get Report

taking the biggest pounding.

Shares of Citigroup and J.P. Morgan and other bank stocks closed sharply lower, in another bleak day on Wall Street. Citi plunged $3.95, or 10.97%, to $32.05. J.P. Morgan fell $1.59, or 6.09%, to $24.51. Both stocks set new 52-week lows. Meanwhile, the Philadelphia Bank Index sank 4.31%.

The swirl of bad news involves everything from the impact of the

WorldCom

(WCOME)

bankruptcy filing to the specter of another round of congressional hearings that will focus on the role of the big commercial banks in the collapse of

Enron

. And the overall foul mood still hovering over Wall Street following last Friday's 390-point plunge in the Dow Jones Industrials isn't helping much.

Shares of Citigroup, however, were taking it on the chin more than others because of some ugly headlines in Monday's edition of

The Wall Street Journal.

Not only did the paper report that the National Association of Securities Dealer is investigating the bank's one-time star telecom analyst, Jack Grubman, but the

Journal

also reported that a congressional panel Tuesday will take a hard look at some $4.8 billion in questionable financing deals that Citigroup arranged for Enron.

In fact, the Senate's Permanent Subcommittee on Investigation has scheduled two days of hearings on the sophisticated financing deals arranged by Citigroup, J.P. Morgan and more than a half-dozen other banks. The panel is trying to determine whether the deals were really loans to Enron that were camouflaged as energy-trading transactions as part of a strategy to permit Enron to increase its reported cash flow and makes its debt load appear lower.

At the hearings, a number of top executives from J.P. Morgan and Salomon Smith Barney, Citi's investment banking arm, are scheduled to testify. The congressional panel also will hear testimony from a number of corporate finance analysts with Moody's Investors Service and Standard & Poor's -- the two major corporate-bond rating agencies.

The hearings are sparking new fear among investors that the big commercial lenders could be liable for millions of dollars in damages to Enron shareholders and bondholders. There's even the threat the Securities and Exchange Commission could pursue civil penalties against the banks on aiding and abetting charges, says Donald Langevoort, a securities professor at Georgetown University School of Law.

Add that all up, and it's horrible day for bank stocks.