Citigroup and Merrill in $20bn ARS agreements (at FT.com)

The credit crunch hit the financial sector hard again on Thursday as agreed to buy a total of up to $20bn in auction-rate securities (ARS) and AIG shares plunged amid fears the insurer might need more capital. The protracted woes of three of the world's largest financial groups underline the extent of the problems plaguing Wall Street and suggest that, even after a year of huge losses and writedowns, banks and insurers remain under severe pressure. The widespread sell-off in financial stocks dragged the stock market lower. The Dow Jones Industrial Average fell 1.9 per cent as AIG plunged 18 per cent, its biggest daily fall since it went public in 1969, to close at $23.84. Lehman Brothers shares fell 12 per cent while Merrill was down more than 8... [read full story]