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Financial Winners and Losers: AIG

Financial stocks were mixed Thursday, with American International Group, Fannie Mae and Freddie Mac on the rise again.

(Updated with final share price movements throughout)

NEW YORK (

TheStreet

) -- Financial stocks were mixed Thursday, with

American International Group

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

,

Fannie Mae

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and

Freddie Mac

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on the rise again.

AIG, Freddie and Fannie

-- the so-called "zombie" stocks, as the government owns roughly an 80% stake in each -- were rising without any company-specific news circulating. Reasons offered for the two-day jump ranges from short covering to speculation that the fiscal health of each may be stabilizing. AIG is due to report earnings Friday, with Freddie and Fannie expected to post quarterly results not long after.

Additionally, a report in the

TheStreet Recommends

Washington Post

on Thursday also indicated that the government is moving closer to a plan to restructure AIG, Freddie and Fannie and get them back into private hands.

AIG finished higher by 53 cents, or 2.4%, to $22.53, bringing its two-day rally total to 66%. Freddie rose 5% to finish at 84 cents, and Fannie climbed 6.8% to 79 cents.

Bank of America

(BAC) - Get Bank of America Corp Report

was also among the winners despite a

Wall Street Journal

report that the bank's loss projections for

Merrill Lynch

increased by almost $2 billion two days before shareholders approved the acquisition of the brokerage. The bank's executives, however, concluded the losses weren't severe enough to disclose publicly before the vote.

Rochdale Securities analyst Richard Bove said his net conclusion is that shareholders ultimately benefitted from the deal, as shares are 30% higher than they were on Dec. 29, when the new information concerning Merrill Lynch's losses were disclosed to BofA's management.

"The point here is clear. The Merrill merger appears to have been additive to the bank, not a negative," Bove wrote in a research note. "However, there is a politician/press vendetta to remove

CEO Ken Lewis from his position. In essence he is supposed to be fined and fired for adding value to the company's earnings and its stock price."

In other BofA news, the

Journal

reported that a U.S. District Court judge refused to sign off on a consent decree between the

Securities and Exchange Commission

and the bank, saying that approving the deal without a hearing would leave the public in the dark regarding a key aspect of the Wall Street bailout.

On Monday, BofA said it will pay $33 million to settle charges with the SEC. The SEC on Monday charged BofA with making "materially false and misleading statements" in connection with its acquisition of Merrill Lynch.

In a research note, Keefe Bruyette and Woods analysts reiterated an outperform rating on BofA and raised the stock price target to $19 from $16.50. The firm said that despite a 36% rise in shares in the last three weeks, BofA still offers significant value to shareholders.

BofA shares tacked on 4 cents, or 0.2%, to $16.70. Among other bank stocks,

Wells Fargo

(WFC) - Get Wells Fargo & Company Report

slipped 0.2% to end the day at $27.97, while

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. Report

slid 2.5% to $40.75.

In separate research notes, KBW analysts downgraded

Fifth Third Bancorp

(FITB) - Get Fifth Third Bancorp Report

and

SunTrust Banks

(STI) - Get SunTrust Banks, Inc. Report

to market perform from outperform on valuation. Fifth Third shares closed down 5.8% to $9.41, and SunTrust lost 2.8% to $20.88.

Elsewhere,

Morgan Stanley

(MS) - Get Morgan Stanley Report

shares gave back 50 cents, or 1.6%, to finish at $30.55 after the bank said Thursday it paid $950 million to buy back from the government warrants issued as part of the Troubled Asset Relief Program. In June, Morgan Stanley repaid the $10 billion it borrowed under TARP.

Citigroup

(C) - Get Citigroup Inc. Report

, meanwhile, rose 6.2% one day after shares broke a one-day volume record on the

New York Stock Exchange

with 347 million shares changing hands. On Wednesday, Citigroup sold $2.5 billion in five-year non-guaranteed notes. Shares added 22 cents to $3.80.