Monday's Financial Winners & Losers

The sinking ships of mortgage lenders and bond insurers continued to take the financial sector down with them Monday, as they take on water.

Shares of jumbo loan specialist Thornburg Mortgage(TMA Quote) lost more than half their value, after the company announced it faced additional margin calls. Thornburg said it faces $270 million more in margin calls on top of the $300 million it disclosed last week, and wasn't sure it could pay. A Citibank analyst downgraded the stock to sell on fears that it would declare bankruptcy and a late rally on news that it found some liquidity through a $992 million collateralized mortgage debt transaction it financed late Monday only helped modestly. The stock closed down $4.58 at $4.32.

Fellow mortgage lender IndyMac(IMB Quote) also shed 20% to $4.92. The company updated its corporate blog noting that production was down 33% from last month and delinquencies increased.

Bond insurers weren't faring any better, after Warren Buffett decided to withdraw his offer to reinsure $800 billion of municipal bonds guaranteed by MBIA(MBI Quote), Ambac (ABK Quote) and Financial Guaranty Insurance Co. MBIA and Ambac have been frantically trying to increase capital in an attempt to avoid losing AAA ratings. The companies desperately need to keep these ratings to effectively stay in business. MBIA sold off 35 cents to $12.62 and Ambac lost $1.29 to $9.85.

Rival guarantor Security Capital Assurance(SCA Quote) has already lost its AAA status. It plummeted 52.6% to 73 cents after it said it's hired Rothschild as an advisor to consider strategic options and warned of a big loss.

Investment banks were not doing any better once a Bank of America analyst cut first quarter earnings estimates and price targets on four big names, including Goldman Sachs (GS Quote), citing worsening trends in the equity markets. Goldman estimates were slashed by 45%; Lehman Brothers(LEH Quote) were reduced 43%. Morgan Stanley(MS Quote) was Bank of America's favorite, as the analyst said it had the least amount of inventory mark issues vs. its competitors and a better business mix. Goldman was down $4.55 to $165.08, Lehman down $2.38 to $48.61 and Morgan was only losing 54 cents to trade at $41.58.

Bear Stearns(BSC Quote), which also saw its estimates cut by BofA, also was hit by news it was targeted in a widening probe of U.S. municipal bond firms, according to Bloomberg. Bear slipped another $2.54 to $77.32.

Overall the NYSE Financial Sector Index was down 57.92 to 7,284.92.

On the other hand, student lender Sallie Mae(SLM Quote) ticked up after announcing today that it has closed $31.3 billion in asset-backed commercial paper and term loan facilities that will provide funding for the company's education loans. Fitch Ratings also affirmed the investment-grade ratings, noting the student lender's low credit risk and stable liquidity profile. Shares were up 0.9% to $19.78.

E*Trade Financial(ETFC Quote) also saw its shares jump on news that it had appointed Donald Layton as its new CEO. The market was rife with speculation that the company was preparing for a sale or breakup, but Layton dispelled those rumors, according to the Associated Press. The online brokerage added 1.6% in value to $4.34.

Finally, senior management of MF Global (MF Quote) went on a share-buyback spree on Friday, as the brokerage's price plummeted after it announced a $141.5 million loss due to a rogue trader. Volume was heavy on Monday as the buying continued sending the stock up 12.3% to $19.70.