The markets lost ground again Friday as the growing AIG ( AIG) bonus controversy weighed on the financials.

The Dow Jones Industrial Average fell 122.42, or 1.65%, to 7,278.38, while the S&P 500 dropped 15.50, or 1.98%, to 768.54. The Nasdaq lost 26.21, or 1.77%, to 1,457.27.

Joe Terranova said on CNBC's "Fast Money" TV show that the uncertainty generated in the last 48 hours from the political fallout from the AIG bonus controversy has destabilized the financials.

Jeff Macke said the constant changing of the rules by Congress and the federal government makes it difficult to value stocks and leaves investors to trade on a technical bsis.

Pete Najarian said the best example of that uncertainty could be seen in the explosion of the VIX today to 46. Tim Seymour said equity investors feel as they are out of a limb with credit spreads worsening.

Terranova said there is very little incentive for private equity companies to help troubled banks if they don't know what they are stepping into.

Melissa Lee, the moderator of the show, asked the panel to comment on the plunge in the dollar and subsequent emergence of the reflation trade. She pointed out that oil has hit a 3-month high while copper has surged to a 41/2-mnth high.

Terranova said gold is much too volatile for a trade. His preference is oil, which he says investors should get into after a pullback.

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