Merrill had been widely seen as the next domino to fall after Lehman Brothers, and its stock began to sink rapidly last week. Merrill shares fell more than 12 percent on Friday, and are now worth about one-fifth what they were a year ago.

In an article posted late Sunday on its website, the Wall Street Journal said Bank of America and Merrill Lynch had reached a deal valuing the investment bank at $44 billion, or roughly $29 a share.

The Journal article didn't cite the source of this information as of 11 p.m. Neither Bank of America nor Merrill mentioned a merger on their websites at that hour.

If accurate, the sale price would represent a 40 percent premium over Merrill's closing price on Friday, when speculation about its future drove shares down to $17.05. They had traded for $78.66 about a year ago.

At the same time, American International Group, the insurance company, raced to hammer out a major reorganization, including the sale of its coveted aircraft-leasing company and other units, to shore up its balance sheet, the New York Times reported, citing only "a person briefed on the company's strategy."

A.I.G., like Merrill, had seen its share price pummeled as it revealed the breadth and depth of its exposure to now-suspect mortgage-backed securities—and the losses it has sustained on them. A.I.G.'s stock fell more than 30 percent on Friday alone, trading for as little as $11.49. Less than a year ago, its shares fetched more than $70.

Besides offering to sell its International Lease Finance Corporation unit, which owns almost 1,000 commercial aircraft that it leases to airlines around the world, A.I.G. is also seeking a capital boost of $40 billion, the Times said. As of the close of Friday's trading, all of A.I.G.'s outstanding shares combined were worth less than $33 billion.

A.I.G. lost more than $13 billion in the first half of this year, most of it due to investments in mortgaged-backed securities and other debt-related instruments. If that weren't bad enough, Standard & Poor's, the credit-rating agency, said Friday that it may cut A.I.G.'s rating [subscription required]. Lower credit ratings would increase A.I.G.'s cost of doing business, likely deepening its losses.

Unaddressed on Sunday, but still overhanging the financial services industry is the fate of Washington Mutual, one of the nation's largest mortgage lenders. A team of private equity firms pumped $7 billion into the bank last April, but its losses have continued to mount and its shares barely paused in their slide. They have lost more than 90 percent of their value in the last year, and closed on Friday at just over $2.