Financial stocks were flattened Monday as the long-running credit crisis claimed two more Wall Street giants and a third company found itself walloped by traders worried about its capital cushion.

Leading the selloff was

Lehman Brothers

(LEH)

, which filed for bankruptcy protection after the New York investment bank failed to find a buyer during a weekend of efforts to stabilize the firm. Following the filing, shares of

Lehman

were shredded, dropping $3.44, or 94%, to 21 cents.

Another story stock was

Merrill Lynch

(MER)

, though its shares ticked up on word that

Bank of America

(BAC) - Get Report

will acquire the brokerage firm in a $50 billion deal. That allowed

Merrill

to tack on 1 cent to $17.06.

While the transaction means the days of independence are over for one of the nation's best-known financial brands, for BofA, the pact marks the second time in a matter of months that the Charlotte-based bank has come to the rescue of a struggling firm. Earlier this year, it took over mortgage company Countrywide Financial.

Shares of BofA sank 21.3% to $26.55.

Then there was

AIG

(AIG) - Get Report

, whose stock lost 61% to $4.76 amid reports it's looking to sell some of its assets and raise new capital. In order to avoid a downgrade from the credit agencies, New York-based AIG may try to get a $40 billion infusion, according to a report in

The Wall Street Journal

.

Elsewhere in the group, reports emerged that Switzerland's

UBS

(UBS) - Get Report

is facing another $5 billion in writedowns related to its investments in mortgage paper and other securities. Shares of UBS dropped 18% to $16.95.

Washington Mutual

(WM) - Get Report

, another troubled name whose stock has been in a tailspin, lost 27% to $2 after Standard & Poor's cut its ratings.

Goldman Sachs

(GS) - Get Report

, a day ahead of its earnings report, was down 12%.

Morgan Stanley

(MS) - Get Report

, which will release its quarterly numbers Wednesday, fell 13.5%.

Citigroup

(C) - Get Report

and

JPMorgan Chase

(JPM) - Get Report

, members of the

Dow Jones Industrial Average

along with AIG and Bank of America, traded lower, as well.

Considering the damage in individual stocks, it came as no surprise that sector measures were hit hard. The Amex Securities Broker/Dealer index slid 9%, while the NYSE Financial Sector index and the KBW Bank index tumbled 8.4%.

This article was written by a staff member of TheStreet.com.