Updated from 1:13 p.m. ET

Financial stocks experienced mixed and wild trading Thursday, as uncertainty about the government's handling of the bailout package rattled the sector.

The KBW Bank Index gained 1.8% to 27.13, and the

Financial Select Sector SPDR

(XLF) - Get Report

ETF was edging up 1.6% at $9.11.

The relatively modest moves in the sector indices belied broader moves among the space's big names, nearly all of which are participants in the Treasury Department's Troubled Asset Relief Program, which has provided cash injections to firms in exchange for preferred equity stakes. The

Obama administration

on Wednesday announced it would attach pay caps for executives to the deployment of additional capital, a sign that additional bailouts will not come as easily under the new president.

Shares of

Bank of America

(BAC) - Get Report

were up 3% to $4.84. Earlier in the session, the stock reached an intraday low of $3.77.

BofA

made headlines earlier this week on reports that senior executives were departing the firm for

Deutsche Bank

(DB) - Get Report

. Skepticism about the bank's viability persists following its merger with

Merrill Lynch

and the government's deployment of billions in additional bailout aid.

Wells Fargo

(WFC) - Get Report

lost 6.8% to $16.27, after earlier sinking nearly 16%. It has received $25 billion in government funds and last year acquired the troubled

Wachovia

.

Citigroup

(C) - Get Report

was up fractionally to $3.53. The company on Thursday agreed to sell servicing rights on part of its loan portfolio to Wilbur Ross for $1.5 billion.

Several large bank holding companies were holding up despite the financial malaise.

JPMorgan Chase

(JPM) - Get Report

was gaining 2.1% to $24.54.

Former investment banks turned bank holding companies were also faring well.

Goldman Sachs

(GS) - Get Report

was up 5.6% to $92.85.

Morgan Stanley

(MS) - Get Report

was gaining 5.4% to $23.19. Reports indicated earlier this week that

Goldman

is interested in paying back its $10 billion in government money.