Fannie, Freddie: Financial Winners and Losers

(Updated with closing stock price moves throughout.)

NEW YORK (TheStreet) -- Fannie Mae (FNM Quote) and Freddie Mac (FRE Quote) were among the top performers of the financial sector Monday, surging 41.7% and 18.5%, respectively.

Both Fannie and Freddie were benefitting from the Federal Reserve's announcement Friday that it bought $5.6 billion of Fannie, Freddie and Federal Home Loan Bank debt. Fannie shares finished up 50 cents to $1.70, and Freddie rose 32 cents to $2.05.

Regional banks gave up early gains and ended the day mostly lower after Rochdale Securities analyst Dick Bove said up to 200 banks could fail. The increase in bank failures indicates that the Federal Deposit Insurance Corp. will seek more funds from healthy banks, he said.

"Therefore, it is likely that there will be another special assessment to banks in the fourth quarter this year and the second quarter next year to build FDIC reserves," Bove wrote in a research note Sunday. "It also means that perhaps another 150 to 200 banks will fail."

More than 80 banks have already failed this year, including Guaranty Financial (GFG Quote), which regulators shuttered Friday before selling off assets to Spain's Banco Bilbao Vizcaya Argentaria (BBV Quote).

In a separate research note clarifying his positions, Bove said to avoid all regional bank stocks, even ones that were considered best in class, such as Wells Fargo (WFC Quote), US Bancorp (USB Quote), BB&T (BBT Quote) and PNC Financial (PNC Quote).

He added that First Horizon (FHN Quote), Regions Financial (RF Quote), SunTrust (STI Quote), Fifth Third Bancorp (FITB Quote), KeyCorp (KEY Quote), Comerica (CMA Quote), Marshall & Ilsley (MI Quote) and Zions Bancorp (ZIONS Quote) were "definitely challenged" and that he expects "a significant pullback in prices for the regional banks near term."