AIG: Financial Winners and Losers

(Updated with final stock price moves.)

NEW YORK (TheStreet) -- American International Group (AIG) was among the losers of the financial sector Tuesday, ending a two-day rally that had seen the insurer's stock rise more than 30%.

AIG shares retraced gains late in the day and finished lower by $2.60, or 5.4%, at $45.80 after Jim Cramer wrote on RealMoney that the company should consider a secondary offering, stoking market chatter. AIG declined to comment on the rumors, according to CNBC.

AIG shares surged after a report released Monday by the Government Accountability Office, which oversees the Troubled Asset Relief Program, said there are "signs of stabilizing" and "some progress" even as the ultimate success of AIG's restructuring and repayment efforts remains uncertain.

Separately, House Oversight Committee Chairman Rep. Edolphus Towns (D., N.Y.) is looking into former AIG Chairman and CEO Hank Greenberg's restructuring proposal that would slash the federal government's stake in the insurer from 80% percent to 20%, according to a Bloomberg report.

Meanwhile, Bank of America (BAC) was among the winners after the bank exited a loss-sharing deal with the government, even as a trial with the Securities and Exchange Commission loomed.

BofA paid $425 million to the Treasury Department to exit an arrangement where losses on $118 billion in risky assets mostly associated with Merrill Lynch were protected by public funds. Previously, BofA had contested the idea of making any payment at all, arguing that it had not signed the papers accepting the government backstop.

Rochdale Securities analyst Dick Bove said the payment, along with the bank's other recent moves, suggests that the company is regaining its financial credibility. Bove raised his stock price target to $25 from $19 to reflect the bank's strengthened financial condition.