AIG: Financial Winners & Losers

NEW YORK (TheStreet) -- American International Group (AIG Quote) was among the losers of the financial sector Tuesday even after a report that officials want the U.S. pay czar to ease compensation curbs for the insurer.

AIG slid nearly 2% after The Wall Street Journal reported that federal officials have been urging pay czar Kenneth Feinberg to ease the compensation restrictions at the insurer for 2010, arguing that the taxpayer would ultimately bear the burden if the restrictions are too severe.

Federal Reserve and Treasury officials told Feinberg that tough restrictions ultimately could jeopardize the government's ability to recoup its roughly $90 billion in loans because key employees would leave, the report said. AIG shares were lately down 67 cents, or 1.9%, to $34.61.

Elsewhere, Bloomberg reports that the Fed this month asked nine U.S. banks which were part of this year's stress tests to submit plans including a timetable to repay funds from the Troubled Asset Relief Program, citing a person familiar with the situation.

The nine banks include Bank of America (BAC Quote), Citigroup (C Quote), Wells Fargo (WFC Quote), Regions Financial (RF Quote) and Fifth Third Bancorp (FITB Quote), among others.

Among those names, BofA shares were down 0.9% to $16.15, Citigroup dipped 0.5% to $4.26, Wells Fargo fell 1.1% to $27.76, and Fifth Third lost 2.8% to $9.89. On the other hand, Regions was climbing 1.9% to $5.80.

In other Citigroup news, the bank said it will sell its Diners Club North American franchise to BMO Financial (BMO Quote). Citigroup said the sale would reduce its assets in Citi Holdings by about $1 billion and isn't expected to have a material impact on Citigroup's net income or capital ratios. BMO said the agreement represents net receivables of almost $1 billion and about 7.8 billion in card transactions.