[Professor S]

Speaking of populist attacks on business and their consequences...

Jan. 22 (Bloomberg) -- U.S. stocks sank, extending the Dow Jones Industrial Average’s biggest three-day tumble since March, as financial shares slumped on President Barack Obama’s plan to rein in banks and results at Google Inc. disappointed investors.

Bank of America Corp. led the S&P 500 Financials Index to a 3.3 percent drop as uncertainty over Ben S. Bernanke’s confirmation for another term as head of the Federal Reserve also weighed on lenders. Google sank 4.3 percent after fourth- quarter sales growth missed the most optimistic of analysts’ estimates. U.S. Steel Corp. fell as Goldman Sachs Group Inc. said China’s move to slow its economy will hurt metal producers.

The Standard & Poor’s 500 Index lost 1.8 percent to 1,096.8 at 3:31 p.m. in New York, erasing its gain for 2010. The gauge has slid 4.7 percent over the past three days as China moved to slow lending and Obama made his proposal. The Dow sank 170.65 points, or 1.6 percent, to 10,219.23 and is down 4.7 percent over the past three days. The VIX, a measure of volatility, jumped 24 percent to 27.67, the highest since November.

“Bernanke is viewed by markets around the world as a positive for the U.S. economy and the uncertainty about his reconfirmation is accelerating today’s sell-off,” said Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York. “Tag that onto the concerns over China’s economy and Washington’s offensive against the banks.”

The S&P 500 is down 4.5 percent since Alcoa Inc. started the fourth-quarter earnings season on Jan. 11 with lower-than- estimated profit. Analyst forecast earnings grew 73 percent in the October-December period following a record nine quarter slump.

Banks Slump

Morgan Stanley lost 4.5 percent to $28.2, Bank of America fell 2.7 percent to $15.06 and Goldman Sachs declined 3.2 percent to $155.69. The S&P 500 Financials Index has slipped 6 percent over the past two days, its biggest decline since September.

Obama yesterday called for limiting the size and trading activities of financial institutions as a way to reduce risk- taking and prevent another financial crisis. The proposals, to be added to an overhaul of regulations being considered by Congress, would prohibit banks from running proprietary trading operations solely for their own profit and sponsoring hedge funds and private equity funds.

Meredith Whitney, the banking analyst who forecast Citigroup Inc.’s dividend cut in 2008, said Obama’s plan will probably be approved and may “dramatically” reduce trading profits.

Is this how he planned to address the economy after the Mass. Senate upset? By attacking financial institutions in a recession? Is this going to create jobs? Is this going to spur lending and investment?

I simply disagree with Pres. Obama... My 401K plan has hired a hitman.