More Videos:

Bank Stocks Pull Back on Fiscal Cliff Fear: Financial Losers

Tickers in this article: BAC C I:BKX JPM WFC

Updated with market close information.

NEW YORK ( TheStreet) -- The nation's biggest banks trimmed earlier losses late in Thursday's trading session, as Republican leaders confirmed that the House of Representatives would return to work on Sunday, in an effort to avert the Fiscal Cliff.

The "big four" U.S. banks all recovered from earlier 2% declines. Three of the big four saw 1% declines, including Bank of America , with shares closing at $11.47, Citigroup (C) closing at $39.25 and JPMorgan Chase (JPM) , closing at $43.63. Shares of Wells Fargo (WFC) ended the day with a slight decline, closing at $34.18.

The broad indexes all ended with slight declines, recovering from earlier losses. The KBW Bank Index (I:BKX) was down slightly to close at 50.95, with all but seven of the 24 index components showing declines.

Speaking on the Senate Floor Thursday morning, Senate Majority Leader Harry Reid (D., Nev.) was doubtful over the prospect of a happy New Year for taxpayers, saying "I don't know time-wise how it can happen now," and that "Democrats can't put together a plan on their own because, without participation of Senator Minority Leader McConnell and Speaker Boehner, nothing can happen on the fiscal cliff."

House Speaker John Boehner (R., Ohio), along with House Majority Leader Eric Cantor (R., Va.) and Majority Whip Kevin McCarthy (R., Ca.) released a statement late on Wednesday, reiterating that the ball was in the Senate's court: "The House has acted on two bills which collectively would avert the entire fiscal cliff if enacted. Those bills await action by the Senate. If the Senate will not approve and send them to the president to be signed into law in their current form, they must be amended and returned to the House."

Also late on Wednesday, Treasury Secretary Timothy Geithner said in a letter to Reid that the federal government would hit its $16.4 billion debt limit on Dec, 31. Geithner said that the Treasury would be ready to take "extraordinary measures" in order to "create approximately $200 billion in headroom under the debt limit."

Later on Thursday, Republican leaders in the House of Representatives said they would return to work on Sunday, and the Wall Street Journal said that the House would hold its first vote at 6:30 p.m. Sunday, citing an unnamed "GOP leadership aide."

Fiscal Cliff Won't Stop Capital Return

The Federal Reserve will begin its next round of annual stress tests in February, and in March will hand down its decisions on whether or not to approve large bank's plans to return capital to investors through dividend increases and share repurchases.

In addition to worries over the Fiscal Cliff pushing the U.S. economy back into recession, there's a possibility that the dithering in Washington will keep the annual "patch" on the Alternative Minimum Tax from being passed in time for the Internal Revenue Services to avoid major delays in processing returns and sending refunds to millions of taxpayers. Acting IRS Commissioner Steven Miller sent a letter to Congress in November and another letter last Wednesday, explaining that unless the annual patch is passed, "30 million additional taxpayers will become subject to the AMT on their 2012 income tax returns."

Usage of this site is governed by TheStreet's Terms of Use available here. Information collected on this site may be collected by TheStreet and OC Register. TheStreet's use of information collected on this site will be governed by TheStreet's privacy policy available here. OC Register's use of information collected on this site will be governed by OC Register's privacy policy available here. If either TheStreet's or OC Register's privacy policy have provisions that are more restrictive than the provisions of the other party's privacy policy, such more restrictive provisions shall not apply to such other party.

Copyright © 2012 Orange County Register Communications. All Rights Reserved.
Site Help | Site Map