Good morning! Three big stories this morning:
1) Citigroup posted a first-quarter net profit today. As manysourcesnote, one major factor is an accounting change that allows companies to record the market value of their debt as unrealized gain. That won Citi $2.5 billion in paper gains: They posted a $1.6 billion profit. Calculated Risk wonders, "So when do they pay back the TARP money?"
3) Steve Rattner, who heads up the administration’s auto task force, has emerged in a growing state and federal investigation of New York state’s pension fund. SEC documents reportedly describe him as arranging for his investment firm to pay $1.1 million to strike a deal with the fund. Such fees, the Washington Post reports, are "common industry practice and not illegal." But an explicit pay-to-play scheme is illegal, so the investigation hinges on why the payments were made.
- Stress Tests Results to Be Released May 4 (Bloomberg)
- Banks Balk at Selling Toxic Assets (Time)
- Fed Looks Long Term for TALF (WSJ)