B of A falls below $5 a share

Actually, all the bank stocks got clobbered today, but the Bank of America decline is especially noteworthy because many institutional investors aren't allowed to buy a stock if it falls below $5. That may or may not be a big deal in the long term, but at the very least it's a major embarrassment. So why did the bank stocks do poorly? Well, besides ongoing concerns about Europe a proposal being considered by the Federal Reserve would require U.S. banks to have higher capital requirements. From the WSJ:

The central bank's decision to accept the rules laid out by regulators in Basel, Switzerland, as part of a draft proposal that could come before Christmas is a defeat for giant U.S. banks that argued the guidelines needn't be so strict. They contended the Basel approach could prompt them to reduce lending and hurt the economy. At the same time, it isn't clear the bigger capital buffers will accomplish what regulators set out to do in the Dodd-Frank financial overhaul and other recent moves: end the "too big to fail" syndrome that paved the way for the government bailouts of the 2008-09 financial crisis.

Looks like the B of A close with be $4.99, down more than 4 percent on the day.