• AIG's Ed Liddy now says the company will need three to five years to carry out its restructuring plan and repay taxpayer bailout money. [NYT]
• Hedge funds actually saw returns rise more than three percent in April. [DB]
• Walter Noel's Fairfield Greenwich hedge fund is no more. The disgraced firm is handing over its remaining $2.5 billion to Sciens Capital. [NYP]
• The rich get richer: As financial firms raise capital and pay back TARP money, it's Goldman, Morgan Stanley and JPMorgan that are profiting. [Fortune]

• Disappointing retail sales figures and a surprising rise in the number of foreclosures are sending stocks lower this morning. [CNN, WSJ]
• The Obama administration is looking into ways to change the way people across the financial services industry are compensated and that includes companies that didn't even receive federal bailout money. [WSJ, NYT]
• Ed Liddy may be jobless soon: Trustees overseeing taxpayers' stake in AIG are seeking a CEO to replace Liddy as well as new board members. [WSJ]
• Speaking of AIG, were officials like Tim Geithner aware of the bonus situation at the company months before the news broke? It looks that way. [WaPo]

Bank of America has informed fired employees that they cannot accept job offers from competitors for three months unless they give up deferred compensation or waive their right to sue the bank. An outrageous demand, clearly, and certainly not the wisest PR move for the struggling bank. Although it's not as if it's going to pose much of a problem for most people given the likelihood of finding a new job in banking in three months or less is, oh, about nil. [Reuters]

• Bank of America sold off a $7.3 billion stake in China Construction Bank as it seeks to raise cash. Good news: only $26.6 billion to go! [DB]
• Andrew Cuomo is expected to announce that Hank Morris has pleaded guilty in the pension fund probe and will be cooperating with the investigation. [WSJ]
• Citigroup has lent out the same amount it's taken from Washington ($45 billion), a sign that Vikram may have a heart, after all. [AP, Dealbreaker]
• AIG's Ed Liddy will defend his company's rep in front of a Congressional panel today. At the very least, he can report the busted insurance giant is $1.2 billion richer now that it's sold off its Tokyo headquarters. [WSJ, DB]

• The market has been up big the last few weeks. But the ride may be over. "The market has gone too far, too fast," as one fund manager puts it. [BN]
• Following the stress tests last week, a number of banks have been busy de-stressing: Both Morgan Stanley and Wells Fargo raised billions late last week to satisfy new capital requirements mandated by the Fed. [NYT]
• Meanwhile, Bank of America, which needs to raise $34 billion (down from the $50 billion it could have been forced to raise) is looking to offload its stake in China Construction Bank, although finding takers isn't easy. [WSJ]
• Warning: Turning around AIG may take a bit longer than expected. [WSJ]

• Employers only cut 539,000 in April, which was slightly better than Wall Street expectations and an improvement over the month of March. But the unemployment rate rose to 8.9 percent, which is a 25-year high. [WSJ, NYT]
• Stephen Friedman has resigned as chairman of the board of the Federal Reserve Bank of New York after questions about possible conflicts of interest given his role as a director (and shareholder) of Goldman Sachs. [WSJ]
• It looks like GMAC is going to need another bailout. [NYT, NYP]

Federal regulators say that ten of the 19 largest financial institutions in the U.S. will have to raise a combined $75 billion in capital by November. Does this strike you bad news? It shouldn't! "The results released today should provide considerable comfort to investors and the public," explained Fed chairman Ben Bernanke in a statement. Be sure to keep that in mind when you explain to your kids why they can't go to private school next year, and when you find yourself sunning yourself in Coney Island this summer because you couldn't afford a proper vacation. [NYT/Dealbook, Bloomberg]

• Bank of America chief Ken Lewis and several federal officials will be asked to testify under oath as part of an investigation into whether BofA was pressured by the government into completing its deal with Merrill Lynch. [WSJ]
• The stress test tally thus far: Of the 19 big banks under review, six don't need to raise capital, seven others need to come up with some cash, and it remains to be seen what category the other six will fall into. [WSJ]
• General Motors, which faces a June 1 deadline to sort out its troubles or file for bankruptcy, reported a $6 billion loss for the first quarter. [NYT]
• The number of people filing initial claims for unemployment benefits fell last week, and to their lowest level in more than 3 months, too. [CNN]

Last week, Phil Falcone, the billionaire hedge fund mogul best known for picking up the Guccione mansion in 2007 for $49 million, was slapped with a lawsuit by a former employee at his firm. Howard Kagan, who joined Falcone's Harbinger Capital Partners in 2003, claims he was stiffed out of $62 million bonus for the work he did in 2008. How, exactly, did Kagan come up with such a huge sum given Falcone's fund lost, like, billions last year, much like every other hedge fund in town? That's unclear, although it's beginning to look like the suit was part of an attempt to force Falcone into coughing up the cash rather than face the prospect of bad press. Sure, that tactic might work with some nerdy hedge fund manager who enjoys spending quiet nights at home with his HP-12C calculator. But you don't pull that kind of stunt on a ballsy guy like Falcone and live to tell. Did we mention that the dude lives in a former orgy palace and keeps a pet pig in one of his 367 spare bedrooms? [Dealbreaker]

Oh, how the mighty have fallen. Time magazine celebrated the release of its "100 most influential" list last night, a gathering that attracted plenty of rich finance-y types a year ago, back when saying you worked at a hedge fund or investment bank didn't have the reputational value of saying you spent your day repossessing cars or running a funeral home. The financial meltdown translated into a slightly different guest list and seating plan this time around, not surprisingly. Hedge fund billionaire Steve Cohen, who graciously stood on the red carpet last year and even permitted a photographer to take his picture (not that he smiled or anything), wasn't even invited. And while billionaire financier Steve Schwarzman did make the invite list—and turned out for the ceremony—he probably should have just stayed at home.

• Bank of America chief Ken Lewis won't be in a good mood today, that's for sure. Regulators have informed the bank that it will have to come up with $34 billion in new capital if it expects to weather the downturn. [WSJ, NYT]
• For its part, Citigroup may have to come up with $5-$10 billion. [Reuters]
• Remember all the outrage that followed the disclosure that AIG had paid out more than $100 million in bonuses? It seems the bonus pool was four times larger than previously anticipated. Oh, well. [NYP]
• Companies cut an estimated 491,000 workers in April, which is less than previous months and possibly a sign that the worst is over. [BN]

• About 10 of the 19 largest banks that have undergone "stress tests" will be notified by Washington that they need to raise more capital. [WSJ, BN]
• JPMorgan Chase chief Jamie Dimon isn't expecting to be one of the 10: He said he thinks "there are still too many banks in the United States," and will happily acquire some of the institutions that can't survive on their own. [WSJ]
• UBS announced a first-quarter loss of $1.8 billion as the bank took more writedowns on risky investments and client withdrawals continued. [Reuters]

The Way We Live Now: Trapped by our dwindling wealth. Wherefore the rich? Europe is facing a bad recession. Overseas tax havens are being shut down. And Wall Street traders just sit around watching DVDs.

• President Obama will propose new laws today to crack down on companies and wealthy individuals who use a variety of tax loopholes to move their assets offshore and avoid paying taxes. [WSJ, BN]
• Citigroup and Bank of America are both rumored to be working on plans to raise more than $10 billion in fresh capital a piece, although Bank of America is now denying that such a plan is underway. [FT, DB, BI]
• Questions are being raised about New York Fed chairman Stephen Friedman's ties to Goldman Sachs and possible conflicts of interest. [WSJ]

Andrew Cuomo revealed this morning that his office has issued more than 100 subpoenas as he ramps up the investigation into possible kickbacks paid to political figures to obtain pension fund business. Unfortunately, he's still playing coy when it comes to giving up any specifics. He refused to list any of the firms that received subpoenas today. Yesterday, when a reporter asked him if car czar Steve Rattner would eventually be charged for his role in the unfolding scandal—five other people have been indicted thus far—he said to "stay tuned." In other words, put a new bag of popcorn in the microwave and get comfy. He's going to be here for awhile. [NYT, AP]

• Who said the good times are over? On the list of the 10 highest-paid CEOs of 2008: Vikram Pandit, Jamie Dimon, Lloyd Blankfein, and Ken Chenault. [AP]
• Bank of America's board continues to stand by CEO Ken Lewis and has no plans to oust him, says "a person familiar with the deliberations." [WSJ]
• Citigroup is raising some desperately needed cash by selling off its Japanese brokerage and investment units for $5.56 billion. [DB]

It's a good thing hedge fund manager Dan Loeb sold off his carriage house a couple of months ago and is now renting out his jet on an hourly basis. Despite some peppiness on his part, these are clearly tough times for the notoriously temperamental hedge funder. According to his most recent letter to investors, Loeb's firm, Third Point, is currently managing just $1.8 billion, down from more than $5 billion a year ago. And he's been forced to cut staff, too, although the people he kicked to the curb were accountants, techies, and admins, so it's not like it's a big deal or anything. Of course, if he gets really desperate, there are other ways to cut the fat. He could vow to never give fameseeker Julia Allison another free trip on his plane, starters. See? Scaling back in a recession isn't that hard, after all. [Zero Hedge]

• It looks like Chrysler will file for Chapter 11 bankruptcy protection today after last-minute negotiations with creditors failed to result in a deal. [BN]
• Good news: fewer Americans filed first-time applications for unemployment insurance last week. Bad news: personal spending is down. [BN, WSJ]
• UBS has eliminated 2,000 U.S. jobs as part of a round of job cuts. [DB]
• Hedge funder Phil Falcone has been sued by his former right-hand. [NYP]
• State Street Corp. is now under investigation by state regulators. [WSJ]
• Financier Danny Pang has been given $1 million bail. He'll be under house arrest, though, so presumably he won't be heading off to China. [DB]
• Changing AIG's name to AIU has done little to redeem the company's rep or distract from its previous failings, you'll be shocked to hear, we're sure. [NYT]

Embattled Bank of America chief Ken Lewis is going to keep his job as president and chief executive officer. But he won't get to hold on to his title as chairman. After a bitter annual meeting today—and contentious vote by shareholders —Walter E. Massey was elected the bank's chairman. [WSJ]

Bank of America's annual shareholders' meeting kicked off this morning in Charlotte and plenty of angry people turned up for the occasion, not surprisingly. With the bank's CEO, Ken Lewis, hanging on to his job by a thread, he did his best to try and justify Bank of America's numerous missteps in recent months. But he appeared to get a little testy, too. When one person asked him why BofA didn't disclose the extent of Merrill Lynch's problems when it acquired the bank, he refused to answer the question. "I can't because of litigation. You're probably one of them... So if you'd like to hear more, withdraw your lawsuit." Alas, no word yet on whether attendees were further outraged for having been denied free coffee. [Dealbook]