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Friday's Financial Winners & Losers

Financial stocks began generally losing their grip on positive territory around mid-morning Friday as a glut of corrosive news caught up with the sector.

Poor housing data contributed to the reversal. The Census Bureau reported that November home sales slid 9% sequentially and 34.4% vs. last year, and that the new homes inventory rose to 9.3 months.

Meanwhile, bond insurers MBIA (MBI - Get Report) and Ambac (ABK), already prominent victims of the ongoing credit crisis, took more hits after The Wall Street Journal reported that Warren Buffett is launching a competing bond insurer through his Berkshire Hathaway (BRKA) firm.

According to the Journal, the new entity aims to allow local governments to borrow more cheaply, and is planned to start up in New York today.

MBIA lately surrendered $3.31, or 14.9%, to $18.96; Ambac was off 13.3% at $25.27. Berkshire traded up 1.9% to $140,400.

Elsewhere in the sector, beleaguered mortgage investor Luminent Mortgage Capital (LUM) saw heavy trading following yesterday's disclosure of a huge third-quarter loss -- $520.6 million, or $12.17 a share. A year earlier, the San Francisco-based company lost just 17 cents a share, and in the second quarter it earned 20 cents a share.

As expected, this was in large part due to ramped-up margin calls that began in August as mortgage woes hit a climax and the secondary market for mortgage-backed securities "effectively ... seized up," working to drain liquidity in a rapid fashion. Luminent shares were shedding 21% to 68 cents.
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