Fears about the health of the U.S. banking system are back in a big way. Bank stocks plunged 11% Monday in their biggest one-day drop since April 2009, as investors questioned how well giant financial firms will weather a slowing economy and tumultuous markets after an unprecedented downgrade of U.S. debt.
Hardest hit was Bank of America Corp., which saw its stock tumble 20% and the cost of insuring its bonds against default surge 50%. Earlier this year, the bank was dangling a higher dividend before investors, but it has since dropped plans for a 2011 increase, people familiar with…
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