Financial Winners & Losers: Citi, Lehman

NEW YORK (TheStreet) --The daily stock performance of the financial sector was overshadowed on Friday by the long shadow of the Lehman Brothers failure.

The Lehman saga reached a new low in being the top financial story on Friday. The bankruptcy examiner assigned the case of providing an autopsy on Lehman's failure released a 2,000 page magnum opus on massive malfeasance that could have made Herman Melville, Leo Tolstoy and the authors of the 9/11 Report feel like insignificant wordsmiths.

Citigroup(C) and JPMorgan Chase(JPM) were nominated by the Lehman bankruptcy examiner as best supporting villains in the implosion of Lehman.

Both Citi and JPMorgan exacerbated the problems Lehman faced in the preamble to its bankruptcy by demanding increased collateral and changing guarantee agreements, exerting additional pressure on Lehman's already parched liquidity.

Citigroup shares seemed to pick up some negative Lehman karma to close the week. Citi shares had rallied all week to close above $4 on Thursday. It was the first time that Citi shares closed above $4 since early December 2009. The Citi question on Friday was supposed to be, "Are Citi shares now poised to reach for $5."

Yet, Citi shares declined 5% on Friday, to a share price back below the $4 mark. Citi shares were at $3.96, or a loss of 22 cents, in the late afternoon. It was another day of more than one billion shares traded in Citi, however, unlike the previous days' bullish billion-share plus buying streak.

The ghosts of Lehman did not haunt JPMorgan to the extent that they spooked Citi investors on Friday. JPMorgan was down marginally late on Friday afternoon on relatively light trading.

JPMorgan Chase CEO Jamie Dimon spoke publicly on Friday in support of financial reform in Washington, a concession from Wall Street to the Democrats' effort to move ahead even amid Republican opposition. Dimon said he remained opposed to a stand-alone regulatory agency and was opposed to all derivatives trading having to move through clearinghouses, but that Wall Street supported a majority of the financial reform package.

Bank of America -- which announced this week its plans to stop charging bank customers overdraft fees -- like Citi shares ran into resistance on Friday. Bank of America shares were down 2.3% in the late afternoon to $16.71, or a loss of 41 cents.