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(

Updated with final stock price movements throughout

.)

NEW YORK (

TheStreet

) --

American International Group

(AIG) - Get American International Group, Inc. Report

was among the top performers of the financial sector after a report new CEO Robert Benmosche is taking a more patient approach in selling the troubled insurer's assets.

AIG shares traded higher after

The Wall Street Journal

reported that Benmosche is willing to wait as long as three year to offer stakes in two multibillion-dollar foreign units that the troubled insurer had been racing to spin off.

AIG was moving to spin off the units through initial public offerings in order to pay back $173 billion in government aid, the report said.

After jumping more than 13% earlier in the day, AIG shares pared gains and finished up 5% to $50.23. Other insurance stocks were mixed Friday.

Hartford Financial

(HIG) - Get Hartford Financial Services Group, Inc. Report

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rose 2.2% to $24.16, while

MetLife

(MET) - Get MetLife, Inc. Report

slipped a fraction of a percent to $38.08.

Elsewhere,

Fannie Mae

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and

Freddie Mac

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were also on the rise after a report that two

Federal Reserve

district presidents said the central bank may not need to buy the full $1.25 trillion in mortgage-backed securities it had authorized in order to help stem the housing slump.

Bloomberg

reported that Richmond Fed President Jeffrey Lacker said yesterday in a speech that he'll evaluate "whether we need or want the additional stimulus" from buying the full amount, and St. Louis Fed President James Bullard said "it might not be necessary."

Fannie Mae closed up 6.3% to $2.04. Freddie Mac climbed 7.1% to $2.40.

Among bank stocks,

Citigroup

(C) - Get Citigroup Inc. Report

advanced 3.6% to $5.23, continuing its recent climb. The jump comes a day after a report famed hedge fund manager

John Paulson

bought up to a 2% stake in the bank.

Elsewhere,

Bank of America

(BAC) - Get Bank of America Corp Report

tacked on 0.3% to $17.98, while

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. Report

and

Wells Fargo

(WFC) - Get Wells Fargo & Company Report

fell 1.2% and 1.6%, respectively.

In related bank news,

Reuters

reported that the Federal Deposit Insurance Corp. said on Thursday that the industry swung to a $3.7 billion loss in the second quarter, compared with a $7.6 billion profit in the first quarter, primarily due to costs associated with rising levels of bad loans and falling asset values.

The report said that the combined assets of 416 "problem" institutions rose to $299.8 billion in the second quarter from $220 billion at 305 banks in the prior quarter.

-- Written by Robert Holmes in New York.