StreetInsider.com – An analyst note from Morgan Stanley may have created some downside pressure in shares of Bank of America (NYSE: BAC) earlier as the firm argue’s that President Obama’s so-called “Volcker Rule” could cause up to a 5% decline in BofA’s earnings — much worse than the 1-2% decline previously predicted by analysts at Citi.

Although details are sparse, the Volcker Rule will (or at least attempt to) stop large banks from making profits from any kind of proprietary trading. News of such possible regulation has Wall Street in an uproar while Main Street is practically campaigning for Obama’s battle against “fat-cat bankers”.

Elsewhere in the big banking group, Morgan Stanley believes that JPMorgan (NYSE: JPM) could also see a rather large hit (~5%) from the regulation.

Morgan Stanley currently has Overweight ratings on both Bank of America and JPMorgan. The firm lowered its price target on BofA from $30 to $28 today, but maintained its $59 target on shares of JPMorgan.

Shares of Bank of America traded in the red for much of today’s morning session, but the stock has just turned positive and is currently up 0.4% to $15.24. JPMorgan shares also just moved into positive territory, now up 0.6% to $39.60.

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