Financial Winners & Losers: Merrill Lynch

Financial stocks extended their five-day losing streak as the New York attorney general threatened Merrill Lynch(MER Quote) with a lawsuit.

Andrew Cuomo has wrangled settlements from most of the big banking and brokerage names, but has yet to bag Merrill. He cranked up the rhetoric by saying that if the brokerage didn't settle on Thursday, he would see them in court on Friday. Cuomo has been after the Wall Street firms for selling auction-rate securities to investors who thought the instruments would always be supported and would continue to trade like cash products. Merrill fell 7 cents to $24.34.

The NYSE Financial Sector index declined 51.98 to 6,032.78.

Troubled student lender servicing company First Marblehead(FMD Quote)tumbled once again. The company requested that certain documents filed with the Securities and Exchange Commission not be disclosed publicly. The request didn't fuel investor's confidence for the stock as it fell 8.6% to $3.61. First Marblehead has been down since Monday when Goldman Sachs announced it had completed its cash infusion for the lender.

Radian Group(RDN Quote)was another big loser on Thursday. The bond insurers keep sliding as the mortgage lenders remain under pressure. Fewer mortgages mean fewer loans to insure. Radian tumbled 9.1% to $3.01.

A Friedman Billings Ramsey analyst reinitiated coverage on Wachovia(WB Quote) with an "underperform" rating, sending the stock into the red zone. The rating and a price target of $12 prompted shareholders to begin selling. The stock closed at at $14.65, down 25 cents. The analyst expects losses to continue and the weak economy to hamper the company's efforts to boost its business.