Updated from 2:39 p.m. EDT

Financial stocks slid for a second day as the sector was pressured by a 10.7% drop in shares of Bank of America ( BAC).

The Charlotte-based bank was involved in markdowns that contributed to Merrill Lynch's fourth-quarter loss of $15.3 billion, the Financial Times reported. BofA shares ended down 74 cents to $6.19, although the stock finished in positive territory for the week.

Fellow Dow Jones Industrial Average component JPMorgan Chase ( JPM) shed 7.2% on top of Thursday's 8% loss.

Wells Fargo ( WFC) surrendered 9.3% to bring its two-session loss to 18.8%. On Thursday, Wells Fargo said it had extended $51 billion in loans in January and had lent a total of $144 billion over the last four months, six times more than it had lent over the same period last year.

Citigroup ( C) bucked the trend and ended higher on the day after the bank said it would continue to reshuffle executive positions. CFO Gary Crittenden will become chairman of Citi Holdings, the nonbanking unit in charge of its riskier, troubled assets. Citi shares tacked on 2 cents, or 0.8%, to $2.62, and closed out the week with a 47.2% gain.

The weeklong rally in shares of Fannie Mae ( FNM) and Freddie Mac ( FRE) came to a screeching halt Friday. On Wednesday, the Federal Reserve said it will spend up to $300 billion to buy long-term government bonds and an additional $750 billion in mortgage-backed securities guaranteed by Fannie and Freddie, helping shares rally above the $1-a-share level.

However, both stocks tanked Friday as investors booked profits. Fannie dropped 27.8% to 70 cents a share and Freddie was falling 27.7% to 73 cents.

Insurer American Investment Group ( AIG) dropped 22.2% on Friday after the Wall Street Journal reported that the company sent a list of recipients of $165 million in bonuses to New York Attorney General Andrew Cuomo.

Cuomo had subpoenaed a list of the recipients following outrage over the fact that an institution receiving federal bailout money was paying out retention bonuses. AIG shares finished down 36 cents to $1.26.

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