Sellers can’t pull the trigger fast enough on banks today

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If it has anything to do with finance, just sell it.

That’s pretty much the mindset on Wall Street today, as investors’ despair about the health of the global banking plumbs new lows.

The average big bank stock was down 15% at about 11:20 a.m. PST, bringing the year-to-date decline to a stunning 39%.

The broader market also was sharply lower, with the Dow Jones industrials down 221 points, or 2.7%, to 8,059 -- still, however, 507 points above the 2008 closing low of 7,552 on Nov. 20.

The headlines from the finance sector continue to be too much for investors to handle: the British government’s effective nationalization of Royal Bank of Scotland on Monday; a huge quarterly loss reported by money manager State Street today; and a prediction by economist Nouriel Roubini, our era’s Dr. Doom, that U.S. bank and brokerage losses from bad loans could reach $3.6 trillion.

‘If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis,’ Roubini said at a conference in Dubai today, according to Bloomberg News.

All of this follows Bank of America Corp.’s bombshell last week of a huge fourth-quarter loss, necessitating another capital infusion from the U.S. Treasury and a government guarantee on $118 billion of the bank’s toxic assets.

BofA shares are falling deeper into single-digit territory on fears that nationalization may be inevitable: They were off $1.34, or 19%, to $5.84 at about 11:20 a.m. PST.

Among its rivals, Wells Fargo was down 20% to $14.97; PNC Financial was down 32% to $25.38; and JPMorgan Chase was off 13% to $19.78.

In the absence of any conviction about where the credit crisis ends, investors’ easiest decision is to continue to bail out of financial shares, said Richard Sparks, an analyst at Schaeffer’s Investment Research in Cincinnati.

‘I think this is simply a flight from those companies, as quickly as investors can flee,’ he said. ‘It’s sell first and ask questions later.’

-- Tom Petruno

: Chris Kleponis / Bloomberg News