Monday's Financial Winners & Losers

Financial stocks edged higher Monday, as Treasury Secretary Henry Paulson unveiled preliminary plans to revamp the nation's financial regulatory system in the wake of the crippling credit crisis that has engulfed markets since summer.

The plan would increase the powers of the Federal Reserve, eliminate some existing institutions in the current patchwork of regulators and combine others. It could take years to implement, Paulson said.

Unhappy with the plan were the futures exchanges including the InterContinentalExchange(ICE) and the CME Group(CME). Paulson had suggested a merger between the Securities Exchange Commission and the Commodities Futures Trading Commission. CME slid 2.1% to close at $469.10, but InterContinental was ticked up fractionally to $130.50. The NYSE Euronext (NYX) also climbed 63 cents to $61.71.

Also shaking things up was Citigroup (C), which decided to restructure its businesses into four units, splitting its credit-card business away from its consumer bank segment. The stock reacted positively with shares shooting up 2.8% to $21.42.

Elsewhere, an upgrade from Standard & Poor's pushed shares of brokerage Charles Schwab(SCHW) higher. The ratings agency bumped the stock to buy from hold and the stock was up 4.4% to $18.83.

In deal news, Center Financial(CLFC) announced that it received a termination notice from First Intercontinental Bank. Back in September, Center Bank had decided to acquire First Intercontinental and now it looks as if the deal will not go through. Happy investors sent shares of Center up 3.2% to $9.06.

Lehman Brothers(LEH) initially ticked up on news that it was suing Japanese trading company Marubeni for $350 million, but finished in the red. Lehman shares had advanced as much as $1.67 in trading Monday, but closed down 23 cents to $37.64. The investment broker alleges that employees of Marubeni helped arrange funding in a fraudulent manner.

The NYSE Financial Sector index was up fractionally to 7,240.75.

But it wasn't all positive as Ocwen Financial (OCN) plunged 3.3% to $4.44 on rumors that it has lost its Veterans Administration contract. Ocwen is a provider to the financial services industry, specializing in loan servicing, mortgage fulfillment and receivables management services.

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