Bank Shares Fold on Word of Lewinsky Immunity Deal
Talley, Karen, American Banker
Bank stocks fell Tuesday in a market selloff fueled by news that former White House intern Monica Lewinsky's lawyers said she had a immunity deal with Special Prosecutor Kenneth Starr.
BankAmerica Corp. slid $3.3125 a share, to $89.50; Citicorp $3.75, to $163.875; and Wells Fargo & Co. $10, to $360.
J.P. Morgan & Co., whose shares make up part of the Dow Jones industrial average, was down $4.5625, to $123.375.
Regionals were clipped as well, with BankBoston Corp. dropping $1.25, to $49.75; First Union Corp. $1.5625, to $83.8125; and Mellon Bank Corp. $1.75, to $67.6875.
Banks were seen as particularly vulnerable because of their close ties to the government, whose stability was shaken Wednesday when it became apparent that Ms. Lewinsky was about to break her silence about her relationship with President Clinton.
News of the immunity deal fueled a 212-point drop in the Dow by early afternoon because people assumed Ms. Lewinsky's testimony would conflict with earlier testimony by the President that he did not have sexual relations with her.
By day's end, the Dow was off 93.46 points, a 1.04% drop, while the Standard & Poor's bank index was off 1.49%. The Nasdaq bank index dove 1.79%, and the S&P 500 lost 1.49%.
Observers said the development had the same kind of bombshell effect on the market as President Reagan's shooting in 1981 and President Nixon's resignation in 1974. On those occasions, trading virtually stopped before wholesale selling took hold.
"For a while there was very little trading going on and then wham! …