Financial Winners and Losers: BofA

(Adds Jefferies, Legg Mason; updated share prices throughout.)

Financial stocks closed out Thursday on a positive note, even as Federal Reserve Chairman Ben Bernanke was grilled by a congressional committee about his role in steering Bank of America (BAC Quote) away from abandoning its deal for Merrill Lynch late last year.

Bernanke faced intense questioning from the House Oversight and Government Reform Committee over whether he and the Fed pressured BofA to close the deal. BofA CEO Ken Lewis alluded to facing some pressure to complete the deal as shareholders increasingly criticized him for paying too high a premium for the ailing brokerage. Separately, BofA said on Thursday that once it completes a debt exchange by the end of the week, it will have raised more than the $33.9 billion required by the government.

BofA shares spent most of the day in negative territory, but ended the day flat at $12.35. The NYSE Financial Sector Index was rose 62.96 points to 3868.48 and the KBW Bank Index ticked up 0.68 to 36.26.

Big bailout recipient American International Group (AIG Quote) is spinning off two life insurance subsidiaries into special purpose vehicles and in turn giving the government a preferred stake in the companies. The move will lower its loans to the U.S. from $40 billion to $15 billion and cut the credit facility available to AIG from $60 billion to $35 billion. The stock was essentially unchanged for the day finishing up with a gain of four cents to $1.46.

Fannie Mae (FNM Quote) and Freddie Mac (FRE Quote) will both be removed from the Russell indexes as of the close of business on June 29. The stocks were under pressure, as index related funds have to reconstitute their portfolios. Fannie trimmed one cent to close at 63 cents and Freddie was unchanged at 68 cents a share.