Financial stocks took more lumps Monday ahead of the

Federal Reserve's

big meeting Tuesday: the

NYSE

Financial Sector Index underperformed the market with a loss of about 90 points, or 1%, to around 8,867.

Component

Marsh & McLennan

(MMC) - Get Report

fell to pressure the index on a major management change. The New York firm announced late Friday the departure of Marsh Inc. CEO Brian Storms, citing the need for "a different set of leadership and operational skills to complete the successful transformation of Marsh" away from insurance broking, even as that remains "at the heart" of the company.

Citigroup and Morgan Stanley both downgraded Marsh on the news. Shares slid 5% to $24.86.

Maguire Properties

(MPG)

, another member of the NYSE financial tracker, sank 4.3% on a Stifel Nicolaus cut to sell.

Meanwhile

PHH

(PHH)

, a purveyor of mortgage and fleet-management services, suffered a 17% drop after its proposed takeout by

General Electric

(GE) - Get Report

hit a snag.

The Mt. Laurel, N.J., firm said one of the conditions of the merger -- that, immediately after the deal closes,

TST Recommends

Blackstone

(BX) - Get Report

affiliate Pearl Acquisition be "ready, willing and able" to buy the attendant mortgage business from GE -- may go unfulfilled. Pearl now believes its access to debt financing for the sale has been slashed by up to $750 million, said PHH, and Pearl is "not optimistic" that it will ultimately succeed in obtaining the necessary funding.

PHH shares were trading at $23.65. GE lately slipped 12 cents to $40.24, and Blackstone mostly hugged the flatline at $23.92.

Among the many other financial losers today was

Life Partners

(LPHI) - Get Report

, which lost 11.7% to $35.10.

Thornburg Mortgage

( TMA) and

Merrill Lynch

( MER) were off 2.6% and 2.2%, respectively.

But

First Marblehead

tacked on 1.3% after the Boston student lender said it expects to receive about $177.1 million in upfront structural advisory fees from a two-part securitization that should close on Thursday. Shares rose 49 cents to $37.06.

And

National City

( NCC) traded higher, following somewhat erratic trading, despite saying it

expects a third-quarter loss from its mortgage operations that is "more likely to be around the high end" of its prior guidance range of between $130 million and $160 million.

Shares of the Cleveland-based bank nonetheless added 0.9% to $25.99 in support of the KBW Bank Index, which traded more or less in line with the major indices. The index recently slipped 0.3% to 105.67.