NEW YORK (

TheStreet

) -- Financial stocks declined after

Bank of America

(BAC) - Get Report

it was revealed that the

Federal Reserve

objected to the bank's

proposal on increase its dividend.

Bank of America stock fell by 36 cents to $13.52 in the afternoon. Not all were disappointed with Bank of America's announcement. A

Raymond James

analyst said that the bank was an

outstanding buy

and would likely exceed the $2.00 annual run-rate for operating

earnings per share within two years.

Overall, financial stocks were down for the first part if the trading day.

The Financial Select Sector SPDR

(XLF) - Get Report

was down 15 cents at $16.10.

Goldman Sachs

(GS) - Get Report

shares were also down as CEO Lloyd Blankfein took the stand at the trial of

Galleon Group

hedge fund manager Raj Rajaratnam. Blankfein is supposed to testify about the origin of the tip that former Goldman board member

Raj Gupta gave

to Rajaratnam. Goldman shares dropped 89 cents at $159.90.

American International Group

(AIG) - Get Report

shares were also down 38 cents at $36.57 on news that the insurer was bidding $15.7 billion for the Federal Reserve's portfolio of mortgage-backed securities. AIG's CEO Robert Benmosche was interviewed on

CNBC

Wednesday and said there were other bidders for the MBS portfolio.

The winner of the day was

Discover Financial Services

(DFS) - Get Report

, which was up $1.02 at $23.27 on reported a first quarter profit of $459 million, or 84 cents a share. The profit compared to a loss of $122 million, or 22 cents a share, in the same quarter of 2010. The company also raised its quarterly dividend from two cents to six cents.

--Written by Maria Woehr in New York.

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Maria Woehr

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