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Citigroup: Financial Winners & Losers

Citigroup and other bank stocks rise after a compromise of the financial reform bill is reached.

NEW YORK (TheStreet) -- Citigroup (C) - Get Report was among the winners of the financial sector Friday as most bank stocks traded higher following an agreement by House and Senate negotiators on a financial reform bill.

The

Dodd-Frank Act

includes a relaxed "Volcker Rule," named after former

Federal Reserve

Chairman Paul Volcker, which requires that banks invest only 3% of their tangible common equity in hedge funds or private equity.

Lawmakers included a provision authored by Sen. Blanche Lincoln (D-Ark), which sought to limit derivatives trades by banks. Under the reform bill, banks will be allowed to use swaps to hedge their own risks, although banks will have to set up separately capitalized entities or spin those units off to trade riskier derivatives.

The compromise also includes the creation of an independent consumer-protection bureau, as well as limits on debit-card fees that issuers can charge. In addition, a new rule requires that lenders keep at least 5% of any mortgages they securitize.

More on Citi Cramer: Why Citi is a Must-Buy

A vote on the final bill from the House and Senate is expected next week, and lawmakers hope to send the legislation, a priority of President Obama, to the president's desk by July 4.

"We found a way to end too big to fail bailouts, ensuring that no financial institution will ever be capable of bringing down the economy," Sen. Christopher Dodd (D-Conn.) said in a statement. "We closed loopholes in regulations and required greater transparency and accountability for over-the-counter derivatives, asset backed securities, hedge funds, mortgage brokers and payday lenders."

U.S. bank stocks were trading modestly higher Friday as uncertainty over how tough the new financial regulations would be was lifted. Citigroup shares rose nearly 3% to $3.89,

Goldman Sachs

(GS) - Get Report

gained 1.9% to $137.49,

Morgan Stanley

(MS) - Get Report

climbed 1.5% to $24.62,

JPMorgan Chase

(JPM) - Get Report

added 1.5% to $38.59, and

Bank of America

(BAC) - Get Report

was up 1.3% to $15.22.

Among the other stock gainers on the lawmakers' agreement,

Moody's

TST Recommends

(MCO) - Get Report

rose 5.3% to $21.70. The compromise calls for greater oversight of the credit ratings agencies.

On the other hand, mortgage-insurer stocks were losing ground Friday after the compromise was announced.

The PMI Group

(PMI)

fell 6% to $3.28,

Radian Group

(RDN) - Get Report

shares were off 1% to $8.53, and

MGIC Investment

(MTG) - Get Report

was off 0.6% to $7.85.

Insurance stocks were trading mixed.

American International Group

(AIG) - Get Report

was losing 1.7% to $36.15 and

Prudential PLC

(PUK) - Get Report

was off 2% to $15.95, while

MetLife

(MET) - Get Report

rose 1% to $39.78.

-- Written by Robert Holmes in Boston

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