Updated from 2:30 p.m. ET

Financial stocks were taking a hefty beating Thursday, as uncertainty about the efficacy of the government's financial bailout plan persisted, and investors awaited action from Congress on an $789.5 billion economic stimulus package.

The KBW Bank Index was tanking 2.8% to 27.57, and the Financial Select Sector SPDR ( XLF) ETF was down 6.1% at $8.75.

On Tuesday, Treasury Secretary Timothy Geithner unveiled a new version of the bailout package. The multifaceted approach was met with skepticism on Wall Street, and the major indices sold off following the announcement.

Uncertainty continued to prevail in the financial space Thursday, as critics expressed concern over the financial bailout program.

Financial firms were leading among decliners in the Dow Jones Industrial Average. Of the index's members, Bank of America ( BAC) was dow.n 3.92% at $5.87, Citigroup ( C) was losing 2.2% at $3.61, JPMorgan Chase ( JPM) was shedding gaining 0.4% at $26.19, and American Express ( AXP) was falling 5.3% at $15.50.

Outside the Dow, Wells Fargo ( WFC) was losing 0.974% to $16.80. The Financial Industry Regulatory Authority announced it had fined segments of Wachovia, which Wells acquired in October. The fines, totaling $4.6 million, stem from Wachovia's sales of several of its business segments.

Former investment banks Goldman Sachs ( GS) and Morgan Stanley ( MS) were feeling less of a pinch. Goldman was 0.9% at $95.58, and Morgan Stanley was dropping 3.5% at $22.95.

Executives from BofA, Citi, JPMorgan Chase, Wells, Goldman, Morgan Stanley, State Street ( STT) and Bank of New York Mellon ( BK) on Wednesday testified before Congress in defense of their use of capital injections supplied by the Treasury under the Troubled Asset Relief Program.

Elsewhere, US Bancorp ( USB) was also having a rough day, falling 8.9% to $12.95.

There were hardly any winners in the financial space Thursday. One exception to the selloff, Dutch insurance firm Aegon ( AEG) was gaining 3.8% to $5.19.

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