$75 Billion or Bust

Ten of America's biggest banks have been ordered by the Obama administration to raise a combined $74.6 billion in order to protect themselves from a worst-case scenario of projected multibillion-dollar losses through the end of next year, the Wall Street Journal and New York Times report. While none of the banks under scrutiny is seen as at risk of going under, the publication of the so-called stress-test results Thursday found that the nation's top 19 banks were vulnerable to nearly $600 billion in new losses if the economy really fell off a cliff. The revelation "set off an immediate scramble by major institutions for more capital," the NYT notes. By June 8, the 10 must tell regulators how they intend to raise the money, and they must achieve that by November. While nine of the stress-tested banks—including major players like JPMorgan Chase & Co. (JPM) and Goldman Sachs (GS)—have adequate capital, big names like Bank of America (BAC), Wells Fargo (WFC), and Citigroup (C) were told they would have to come up with a whopping $54 billion collectively. Wells Fargo wasted no time in announcing it was seeking to sell $6 billion in shares, while Morgan Stanley (MS) said it will try to raise $2 billion by selling stock and $3 billion by selling bonds, BusinessWeek reports.

One of the stressed-out financial institutions is GMAC, the financing arm of General Motors, but it's the ailing automaker that faces a greater threat after posting a $5.8 billion first-quarter loss. Today, "even after receiving $15.4 billion in federal loans, General Motors is once again on the brink of financial collapse," writes the NYT. With the company leaking cash at an alarming rate and with revenue plunging (globally, the company is spending $113 million more a day than it is bringing in from vehicle sales), GM (GM) seems an odds-on bet for bankruptcy. According to one analyst quoted by the NYT, “Chrysler is the best indicator at this point of where we’re heading with G.M.” Meanwhile, the global recession continues to hurt Toyota (TM), which "tumbled into the red in the fiscal fourth quarter due to a strengthened yen and collapsed automobile demand worldwide," writes the WSJ. The world's biggest carmaker by volume posted a net loss of $7.7 billion in its first quarter ending March 30.

It's official. Federal Reserve Bank of New York Chairman Stephen Friedman abruptly resigned on Thursday night issuing a statement that he's done nothing wrong, the WSJ reports. Friedman has been enveloped in controversy the past few days after it emerged that he held roles as a director both at the New York Fed and at Goldman Sachs, where he also holds shares. The WSJ, which initially broke the potential conflict-of-interest story, writes that "when Goldman converted from an investment bank to a Fed-regulated bank holding company in September, Mr. Friedman's status as a Goldman director and shareholder was in violation of Fed policy that bars certain Fed-bank directors from being shareholders, directors or officers of commercial banks." Still, Friedman contends he was not in the wrong. He did secure permission from the Fed to continue as a director for both throughout the entirety of 2009. While he waited for approval to come through, Friedman bought still more Goldman shares, netting himself a cool $3 million on paper. In a separate profile on Friedman, nicknamed "Mr. Inside," the WSJ paints an impressive picture of a man with powerful ties to both Wall Street and Washington built over his 43-year career in finance.

Google (GOOG) on Thursday admitted that, yes, the company is under a federal investigation. But, according to the NYT, Google asserts it's done nothing wrong in having two board directors splitting time between Google and Apple. One of those directors under fire, Google CEO Eric Schmidt, calmly told reporters there is simply no potential for an antitrust violation. "From my perspective, I don’t think Google sees Apple as a primary competitor,” Schmidt said. And, if there were a problem, Schmidt says he'd simply recuse himself, as he does whenever the Apple (AAPL) board gets down to talking iPhone business. Never mind that the two companies are increasingly going head-to-head with a cell phone operating system plus browser software and online distribution of video, the NYT points out. Still, the Google CEO seems resigned to staying put. "Mr. Schmidt said he had not considered resigning from the Apple board because of the F.T.C. inquiry," the newspaper writes.

Finally, there's some good—well, better—news out this morning over AIG (AIG). The stricken insurer reported its sixth-straight quarterly loss yesterday of $4.4 billion. But, that amounts to a 44 percent year-on-year improvement, CNNMoney.com writes. And if you go quarter by quarter, it's a still bigger improvement. In the previous quarter, AIG reported a $61.7 billion loss, thanks to monster write-downs. Analysts "were heartened" by the progress.