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NEW YORK ( TheStreet) -- Bank stocks rallied on Wednesday as positive economic data from U.S, Asia and Europe buoyed sentiment.

Large-cap bank stocks rallied, with Bank of America ( BAC) gaining 3.2% to close at $7.36. Citigroup ( C) and Wells Fargo ( WFC) gained 2.86% and 2.75% respectively , while the action in JPMorgan Chase ( JPM) was more muted, with the stock finishing higher by 1%

President Obama on Wednesday unveiled details of a broad refinancing program directed at helping "responsible" homeowners, including those who owe more than their homes are currently worth, save an average $3,000 a year by refinancing their mortgages at attractive interest rates.

The $5 billion to $10 billion proposal is expected to be funded by a proposed "Financial Crisis Responsibility Fee" that would be imposed on the largest financial institutions, based on their size and riskiness. The proposal, first announced by Obama in his State of the Union Address, will require Congressional approval.

Bank of America, Wells Fargo and JPMorgan Chase are the three biggest mortgage originators in the country and could gain from a refinancing wave. Bank of America's share of mortgage originations fell to 5.6% in the fourth quarter from 24.7% in 2007 quarter while Wells Fargo's share doubled to 30% over the same period, according to FBR Capital analyst Paul Miller.

But any gains from refinancing could be offset by the fee imposed on the largest banks to fund the plan.

Some analysts believe the proposal is dead on arrival because it will fail to win congressional approval in an election year. Others believe it could be a political victory for Obama's campaign as it counters criticism that he has done little to revive the housing market.

Citigroup on Wednesday received an upgrade from Wells Fargo Securities analyst Matt Burnell. The analyst expects increased capital returns, positive operating leverage and a continued unwinding of Citi Holdings to drive outperformance of the stock, even if capital markets revenues remain weak. The target price on the stock was raised to $35 to $37.

The analyst also upgraded First Horizon ( FHN)to outperform, citing increased capital returns. FHN's robust capital base should allow substantially higher share buybacks in 2012/2013, materially improving capital returns. Aggressive cost reductions (aided by a shrinking non-strategic portfolio) should generate materially stronger PPNR expansion than peers. Still, FHN trades at a 40% P/TBV discount to peers," the analyst argued, raising the price target on the stock to $9.50 to $10.50.

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