Shares of investment banks fell early Friday morning as insurer American International Group Inc. said it lost $7.81 billion during the first quarter because of continued weakness in the credit markets.

American International Group Inc. says it will raise $12.5 billion in the coming months as the insurer looks to shore up a capital base that has been rocked by deterioration in the credit markets.

Shares of investment banks fell Thursday as Bear Stearns Cos. said it could face bankruptcy if shareholders do not approve a sale of the company in a vote May 29.

Financial services stocks turned lower Wednesday afternoon after Treasury Secretary Henry Paulson said large portions of the credit markets are still not functioning in a normal way.

The U.S. credit crisis is easing and the risk in its housing market is dramatically lower now, but economic growth will remain under pressure over the next year, the chief executive of Merrill Lynch & Co Inc <MER.N> said.

By Rina Chandran

Amid distress in the credit markets, Congress is examining the regulation of Wall Street investment banks by the Securities and Exchange Commission and considering whether it should be tightened.

Shares of investment banks fell Tuesday as UBS said it lost $11 billion during the first quarter and Merrill Lynch & Co. said the amount of risky assets it has on its books increased during the first quarter.

Merrill Lynch & Co. disclosed Tuesday that highest-risk assets on its books rose 69 percent during the quarter ending March 28.

Merrill Lynch has received requests from governmental agencies for information regarding auction-rate securities, including the recent failure of auctions, and is cooperating with the requests, the company said Tuesday.

Merrill Lynch & Co Inc <MER.N> sees no need for more capital as the subprime crisis nears an end, but expects U.S. banks with large exposure to consumers to be the next problem area, its chief executive told a Singapore newspaper.

SINGAPORE (Reuters) - Merrill Lynch & Co Inc <MER.N> sees no need for more capital as the subprime crisis nears an end, but expects U.S. banks with large exposure to consumers to be the next problem area, its chief executive told a Singapore newspaper.

Merrill Lynch & Co. said Monday it named Peter S. Kraus executive vice president in charge of the investment bank's business strategy and investments.

Financials face another 40 percent decline in earnings for the second quarter yet have held up well considering all the problems the sector has faced, Michael Thompson, managing director of Thomson Reuters, said.

Pacific Investment Management Co (PIMCO), the world's biggest bond fund, has asked between 5 and 10 Wall Street banks to let recently dismissed employees know that there are vacancies at PIMCO, the Financial Times reported.