Citigroup: Financial Winners & Losers

Citigroup shares were rebounding Wednesday, one day after steep losses tripped a circuit breaker
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NEW YORK (TheStreet) -- Citigroup (C) - Get Report was among the winners of the financial sector Wednesday as most bank stocks rebounded from the previous day's steep losses.


shares retraced some of Tuesday's 5.3% drop, which tripped circuit breakers put in place in the wake of the "flash crash" in early May. A single trade was placed for 8,820 Citigroup shares at $3.3174 on Tuesday, 12.7% lower than the previous trade of $3.80,

Dow Jones Newswires

reported, noting that the trade has since been cancelled.

Citigroup shares were lately up 8 cents, or 2%, to $3.81. Citigroup finishes the month of June with a 6% loss, although the stock is up 15.1% in 2010.

Most other major U.S. bank stocks were trading mixed after the Senate and House of Representatives conference committee agreed to remove a proposed $19 billion tax on the largest banks from the financial reform bill in order to win more support.

Senators Scott Brown (R., Mass.) and Chuck Grassley (R., Iowa) objected to the bank tax, which would require the Federal Deposit Insurance Corp. to collect $19 billion from banks with more than $50 billion in total assets.

To make up for the shortfall, Congress has instead elected to end the Troubled Asset Relief Program (TARP) three months earlier than expected. In addition, the financial reform bill will call for an increase in FDIC deposit insurance premiums on banks with more than $10 billion in assets.

Among other bank stocks trading higher,

Wells Fargo

(WFC) - Get Report

rose 0.2% to $25.98, and

Morgan Stanley

(MS) - Get Report

rose 0.2% to $23.49. On the downside,

Bank of America

(BAC) - Get Report

slipped 0.2% to $14.54, and

JPMorgan Chase

(JPM) - Get Report

was off 0.1% to $37.01.

Shares of

Goldman Sachs

(GS) - Get Report

also lost ground as Gary Cohn, at the bank, told the Financial Crisis Inquiry Commission during testimony that Goldman did not bet against its clients. Cohn offered figures to back up his argument, saying that Goldman had credit protection on 1% of the amounts underwritten for collateralized debt obligations, or CDOs, and residential mortgage backed securities, or RMBS.

Cohn said that Goldman underwrote approximately $14.5 billion of CDOs and nearly $47 billion of RMBS. At the end of June 2007, the bank held approximately $2.4 billion of bonds issued by these CDOs and about $2.4 billion of bonds issued by the RMBS securitization trusts.

"During the two years of the financial crisis. Goldman Sachs lost $1.2 billion in its residential mortgage-related business," Cohn said, according to prepared testimony. "We did not 'bet against our clients,' and the numbers underscore this fact."

Goldman Sachs shares were down 1% to $132.45.

Meanwhile, former AIG executive Joseph Cassano, who ran the insurer's financial products unit until 2008, testified before the FCIC that he told the truth about AIG's unrealized accounting losses and "did my very best to estimate them accurately."

AIG shares were up 0.9% to $34.84.

-- Written by Robert Holmes in Boston


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