Andrew Torgan
CNN Financial News Producer

Despite recent, encouraging signs of life in the battered housing market, here’s a sobering reminder of just how much damage has been done: American homeowners will have lost nearly $500 billion in home value by year's end.

Still, that's a huge improvement over 2008, when values fell by a mind-boggling $3.6 trillion, according to a report released today by real estate Website Zillow.com.

The Los Angeles market suffered the largest total loss in home value at $60.8 billion. Metro Chicago values fell $49.6 billion and New York dropped $49 billion.

But some housing markets actually recorded gains for the year. In the Boston metropolitan area, home values increased by an average of 1.5%, lifting total market value by $23.3 billion there. Nearby Providence, RI, gained $12.4 billion; and Denver increased $10.7 billion.

Treasury Secretary Tim Geithner says the controversial $700 billion federal bailout program will be extended through Oct. 3, 2010.

The Troubled Asset Relief Program, or TARP, will be scaled back and spending limited to newer programs aimed at stopping foreclosures, making loans to small businesses and propping up the credit markets to make loans more available.

“History suggests that exiting prematurely from policies designed to contain a financial crisis can significantly prolong an economic downturn,” Geithner wrote in a letter to congressional leaders. “We must not waver in our resolve to ensure the stability of the financial system and to support the nascent recovery that the administration and the Congress have worked so hard to achieve.”

Under the TARP law, the bailout program would have expired at the end of December if Geithner had not decided to extend it.

Geithner said that in the end he does not expect to spend more than $550 billion and that $175 billion will be repaid by the end of 2010.

That was followed by word that the billions of dollars in bailout money received by Bank of America over the past year is now officially back in government hands.

Just a week after announcing plans to repay $45 billion in taxpayer bailout money, the nation's largest lender says it has cut a check to the government for the full amount.

As a result of the announcement, however, Bank of America will no longer be beholden to government demands that have been imposed on the company over the past year, including caps on pay for its top executives.

Along those lines, President Obama will meet with the chief executives of several big banks next week, in an effort to help spur greater lending to consumers and small businesses, two senior White House officials tell CNN.

The president is also expected to discuss the sweeping financial regulatory reform package that the administration is currently trying to push through Congress during Monday's scheduled meeting.

Officials said that the list of attendees has not yet been finalized, but that it is likely that executives from some of the nation's biggest banks will be present.

The extent to which banks have been willing to lend has remained a focal point for Washington, after the U.S. government pumped billions into the banking sector over the past year in an effort to get the economy back on track.

Consumers and small businesses in particular contend that loans are still tough to come by. But many banks maintain that they are lending, even as the appetite for new loans has dropped off.

Finally, what was arguably one of the most-disastrous corporate marriages of all time draws to a close today as AOL and Time Warner have officially called it quits.

The two announced their intention to merge back in 2000, creating what one analyst referred to as “an unprecedented powerhouse” with dominating positions in the music, publishing, news, entertainment, cable and Internet industries.

At the time, AOL was an Internet giant was worth more than $100 billion and a stock price topping $100 per share.

Today, the company is worth just a little more than $3 billion and its shares will start trading in the $25 range Thursday morning.

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Fed Chairman Ben Bernanke urges Congress to enact reforms.

Andrew Torgan
CNN Financial News Producer

Sales of previously-owned homes rebounded sharply last month to their highest level in two years, getting a strong boost from first-time homebuyers.

Existing home sales jumped 9.4% in September after falling for the first time in four months in August, according to the National Association of Realtors. Year over year, sales were up 9.2% in September.

NAR chief economist Lawrence Yun said much of the buying momentum came from people hoping to take advantage of an $8,000 first-time buyer tax credit, which is set to expire at the end of November.

Early information from a NAR report to be released next month suggests first-time homebuyers accounted for more than 45% of home sales over the past year.

The report was not all good news, however. The median price of homes sold in September was $174,900, a decline of 8.5% from a year earlier. The drop in prices has been led by an influx of distressed properties, which accounted for 29% of sales in September and include foreclosures and short sales.

Bernanke urges Congress to enact reforms

Fed chief Ben Bernanke says that the turmoil in the financial system is "abating", but urged lawmakers to enact comprehensive reforms to help prevent future crises.

In a speech to central bankers in Massachusetts this morning, Bernanke said legislative action is needed to ensure that banks have sufficient capital reserves, and to limit the risks that financial institutions can take.

He also called on Congress to create new mechanisms to deal with the systemic risks posed by financial institutions deemed "too big to fail."

Bernanke’s remarks came one day after the Federal Reserve proposed a review of pay practices at 28 of the nation's largest banks to make sure employees are not tempted to make the kinds of risky bets that helped sink firms such as Lehman Brothers.

Three AIG execs get their bonuses

We told you yesterday that the White House launched its biggest offensive yet against Wall Street pay practices, outlining a series of drastic pay cuts for 136 top executives at the nation's biggest bailed-out companies, including AIG, Citigroup and Bank of America.

But the cuts were not as extensive as had been expected as “pay czar” Kenneth Feinberg gave a special exemption to three AIG executives – letting them keep their large bonuses.

AIG lobbied hard, telling Feinberg that three executives, who were entitled to large retention payments, were particularly critical to the company's long-term financial success and as such should be able to keep their bonuses.

Feinberg said Thursday that he relented in the case of AIG even though he was able to pare down similar pay clauses at the other six companies in his purview.

Five evil things credit card companies can (still) do

Finally, CNNMoney.com has a helpful - albeit infuriating - gallery of the ways that credit issuers are trying to boost their profits in the wake of new measures intended to help cash-strapped customers.

They include hiking interest rates to as much as 36%, doubling minimum monthly payments and adding new annual fees.

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The White House has released its first report on job creation since the American Recovery and Reinvestment Act of 2009

Andrew Torgan
CNN Financial News Producer

The White House today unveiled the first hard data on how many jobs the $787 billion recovery act has created.

So far, companies that have received stimulus contracts directly from the federal government have created 30,383 jobs. These firms have been awarded $16 billion in contracts and have actually been paid $2.2 billion.

Stimulus-fueled job creation has become a very controversial issue. The Obama administration has faced blistering attacks by Republicans who contend that the recovery act has failed to live up to its promise to put Americans back to work.

So far, the federal government has made available a total of $256.3 billion in contracts, grants and loans and has paid out $110.7 billion to state and local governments, non-profit agencies and companies. The reports released today were the first in a series that provides a tally of the actual number of jobs created by the Recovery Act.

The Obama administration downplayed the data, saying it represents just a small sliver of the stimulus that's been spent since the massive recovery act was enacted in February.

No Social Security increase in 2010

Well it’s now official… the Social Security Administration announced today that there will be no cost-of-living increase for the more than 50 million Americans who receive Social Security benefits next year because consumer prices have fallen.

This will mark the first time that Social Security benefits have not been increased year over year since the cost-of-living adjustment was put into effect in 1975.

To help counterbalance the hit, President Obama is calling on Congress to send another $250 relief payment to seniors and other Americans to stem the economic strain.

Last year, Social Security beneficiaries got a 5.8% cost-of-living adjustment, the largest since 1982, largely because of the spike in energy prices.

And it's still not clear yet what if any changes will be made to seniors' Medicare Part B premiums for hospital care next year. The Social Security Administration said in its announcement that if there is an increase that a "hold harmless" provision in the law would protect 93% of Social Security beneficiaries from the increase.

Foreclosures: 'Worst three months of all time'

Despite concerted government-led and lender-supported efforts to prevent foreclosures, the number of filings hit a record high in the third quarter, according to a report from RealtyTrac, an online marketer of foreclosed homes.

"They were the worst three months of all time," said Rick Sharga, a spokesman for RealtyTrac.

During that time, 937,840 homes received a foreclosure letter - whether a default notice, auction notice or bank repossession, RealtyTrac’s report said. That means one in every 136 U.S. homes were in foreclosure, which is a 5% increase from the second quarter and a 23% jump over the third quarter of 2008.

That puts foreclosure-related filings on a pace to hit about 3.5 million this year, up from more than 2.3 million last year.

Weekly jobless claims drop

The number of people filing new claims for unemployment insurance fell to the lowest level since early January, a sign the labor market is slowly improving.

The Labor Dept. says first-time claims for jobless benefits dropped by 10,000 to a seasonally-adjusted 514,000 from an upwardly revised 524,000 the previous week. That’s the fifth decline in six weeks.

And the number of people continuing to claim benefits for one week or more dropped by 75,000 to 5.99 million, its first time below the 6 million mark since the week of March 28.

Goldman is Golden

The Goldman Sachs steamroller keeps chugging along. The investment bank posted a $3.2 billion quarterly profit this morning, crushing estimates for the third straight quarter.

But those profits don't come without public-relations issues.

The quarterly gain allowed Goldman to set aside $5.4 billion for employee compensation - bringing its bonus pool to $16.7 billion through Sept. 30. That's enough money to pay more than $500,000 to each and every one of Goldman's 31,000 employees.

And to critics, that number cries out for a reassessment of Goldman's priorities. Some small Goldman shareholders are sponsoring resolutions at next year's shareholder meeting that would have the board review the firm's pay practices.

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Click here to find the rate in your state.

Andrew Torgan
CNN Financial News Producer

Ford Motor says auto sales fell 5.1% in September from the same month last year, breaking a two-month streak of gains and illustrating the hangover many dealers are suffering through in the wake of this summer's popular “Cash for Clunkers” program.

Rival General Motors reported a 45% drop in sales. Chrysler Group, meantime, said September sales fell 42% from a year earlier.

On a month-to-month comparison, sales at both Ford and GM fell 37% from August. Two of Ford's vehicles - the Focus and Escape - were among the top sellers in the “Clunkers” program.

Chrysler’s sales fell 33% from August, but since the company has a heavier reliance on trucks than its rivals, it did not get much of a sales lift from the rebate program.

Ford was the only member of Detroit’s so-called “Big Three” automakers that did not declare bankruptcy this year or receive any government bailout money.

Saturn crashes to earth

General Motors is shuttering its Saturn brand after car dealership operator Penske Automotive Group announced Wednesday it cancelled plans to acquire the unit.

As a result, GM said it will wind down the brand and dealer network, potentially putting 13,000 Saturn dealership jobs at risk.

The announcement comes nearly four months after Penske agreed to buy the rights to the 19-year old brand from GM when the automaker was in bankruptcy.

Personal income and spending numbers jump

Personal income and spending, important measurements of the economy, both jumped in August – an indication of at least some economic improvement.

Personal income edged up $19.3 billion, or 0.2%, according to the Commerce Department. And personal spending jumped 1.3%.

The government also revised both figures higher for July. The Commerce Dept. is attributing the “Cash for Clunkers” program for most of the increase in spending in August.

Pending homes sales rise

Meanwhile, homebuyers signed more sales contracts in August than in any month this year, boosted by the looming expiration of an $8,000 first-time homebuyers' tax credit.

Pending homes sales surged 6.4%, and have now risen for seven straight months to the highest level in more than two years.

Pending home sales rose 3.2% in July.

Weekly jobless claims rise

Despite persistent signs that we are in the midst of a recovery, people continue to lose their jobs.

The number of first-time filers for unemployment insurance jumped last week. There were 551,000 initial jobless claims filed in the week ended Sept. 26, an increase of 17,000 from an upwardly revised 534,000 the previous week, according to the Labor Dept. That topped economists' forecasts.

In addition, the number of people who continue to receive benefits for one week or more dropped by 70,000 to 6,090,000 in the week ended Sept. 19, the most recent data available.

Detroit: Too broke to bury their dead

Detroit is plagued by unemployment, corruption, and abandonment. But for some families, the tough economic reality extends even beyond the grave.

At the Wayne County Morgue, a record number of unclaimed corpses are filling the freezers. The morgue's chief investigator blames the economy. He says people just can't afford to claim their loved ones.

Checkout CNNMoney.com's latest report on: Assignment Detroit.

47% will pay no federal income tax

Most people think they pay too much to Uncle Sam, but for some people it simply is not true.

In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.

Some in that group will even get additional money from the government because they qualify for refundable tax breaks.

The ranks of those whose major federal tax burdens net out at zero (or less) is on the rise. The center's original 2009 estimate was 38%. That was before enactment in February of the $787 billion economic recovery package, which included a host of new or expanded tax breaks.

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Andrew Torgan
CNN

New home sales posted a modest 0.7% increase in August, missing Wall Street expectations and providing more evidence that the housing market recovery remains tentative.

Sales inched up to a seasonally-adjusted annual rate of 429,000 from a downwardly revised 426,000 in July. And even though it was the fifth straight increase, sales were down more than 3% from the same month last year.

New home sales don’t make up quite as much of the market as existing home sales, which we learned Thursday fell nearly 3% in August. But analysts still watch them very closely, because they typically cost more than previously-owned homes.

As for where homes are selling, sales in the West jumped by 12.1% to 120,000 homes, from 107,000 in July. Activity in the South stayed flat at 224,000 units. The Northeast saw new home sales plunge 16.3% to 36,000, from 43,000 the previous month. Midwestern sales also fell, by 5.8% to 49,000.

The median sales price of new homes fell significantly, to $195,200, from a revised $215,600 in July. The average price sank to $256,800 in August from $273,100.

Along those lines, an analyst at Goldman Sachs is forecasting that new home sales may jump 30% next year, buoyed by low mortgage rates and a “greater than 50% probability” that Congress will extend a tax credit for first-time buyers.

The analyst’s report says new home sales in California will lead the pack as property values increase.

More Americans staying put

Americans have tamed their wanderlust during this recession, according to the latest data released by the Census Bureau. Only about 2.4% of Americans moved from state to state in 2008, down from 2.5% the previous year.

"The mobility rate is lower than it has been in years," said Robert Lang, a demographer with Virginia Tech University. "There's a recession and a housing bust. People can't sell their homes in California and move to Las Vegas or sell their condo in Florida and move to North Carolina."

"People are hunkering down, trying to hold on to what they have," added Andy Beveridge, a demographer and sociology professor at Queens College in New York. "It's a depression, recession mentality."

Plus, a good portion of the population has reached the age where the charm of a new place is more than offset by the fetters of life and responsibilities. "A large share of the population is at the age where they're settled," Lang said. "The baby boomers have good jobs and most are not ready to retire."

Durable goods orders drop

New orders for big-ticket manufactured items like cars and refrigerators fell unexpectedly in August, dropping by their biggest margin in seven months, due mainly to a plunge in commercial aircraft orders as well as a drop in auto sales.

Durable goods orders slipped 2.4% in August after a 4.8% increase in July. Economists were expecting a slight increase. Excluding auto sales, orders showed a negligible decline.

July's overall durable goods gain was mostly the result of auto sales sparked by the government’s “Cash for Clunkers” program.

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Andrew Torgan
CNN Financial News Producer

Sales of previously-owned homes fell in August, snapping a four-month streak of increases.

Existing home sales fell 2.7% last month from July to a seasonally-adjusted annual rate of 5.1 million units, but were up 3.4% from a year ago, according to the National Association of Realtors.

Sales had jumped 15.2% in the previous four months.

Lawrence Yun, the NAR's chief economist, said the drop may reflect delays in completing sales due to tough lending standards and new rules for appraisals.

Nationwide sales are up nearly 14% from their bottom in January, but are still down nearly 30% from their peak about four years ago. For the housing market to stabilize, Yun says sales would need to rise to a pace of around 5.5 million to 6 million.

Additionally, the median sales price was $177,700, down 12.5% from $203,200 in the same month last year.

One bright spot in the report: Despite the decrease in sales, the supply of homes on the market fell significantly in August. Total housing inventory fell by 10.8% to 3.62 million existing homes for sale. That's an 8.5-month supply, down from a 9.3-month supply in July.

Unemployment claims keep sliding

The number of Americans filing first-time claims for unemployment insurance fell last week – the third straight week of declines.

There were 530,000 initial claims filed in the week ended Sept. 19, down a better-than-expected 21,000 from a revised 551,000 in the previous week.

And the number of people who continue to receive benefits for one week or more fell by 123,000 to 6,138,000 in the week ended Sept. 12, the most recent data available.

Banks win first round in consumer fight

This summer, when Obama administration officials talked about overhauling financial regulation, they threw around a catchy phrase sure to appeal to consumers: "Plain vanilla" mortgages and credit cards.

"Plain vanilla" was used to illustrate the powers of a proposed new consumer agency. The agency could set basic standards - like one-page, easy-to-understand applications for 30-year-fixed mortgages.

Now, the so-called Consumer Financial Protection Agency won't get that power, according to a memo on the agency released by House Financial Services Chairman Barney Frank.

The memo also says that some key providers of financial services, such as consumer reporting agencies, real estate brokers and auto dealers, would not be subject to the new agency's oversight.

Although the final bill language has yet to be released, experts on both sides of the fight agree the memo signals that top Democrats have made concessions to smooth passage of the most controversial yet symbolic part of regulatory reform.

Recession puts children on hold

The recession is apparently prompting more women to try to delay having children, according to the first survey aimed at documenting the effects of the economic downturn on childbearing.

Nearly half of working-class women want to put off getting pregnant or to have fewer children, according to the survey, which was commissioned by the Guttmacher Institute, a private, nonprofit reproductive-health research organization.

The study, conducted by Knowledge Networks, involved a nationally representative sample of 947 women ages 18 to 34 with household incomes of less than $75,000, and it was conducted in July and August.

Nintendo slashes Wii price by 20%

Nintendo said it is cutting the price of its popular Wii video-game console by $50 to $199.99.

The 20% price drop will take effect Sept. 27th. The new price is the first reduction since the console launched in November 2006.

The interactive Wii immediately proved wildly popular across demographics – including at nursing homes and rehabilitation centers to aid patients' recovery - and demand for the console outstripped supply more than a year after its initial release.

Nintendo's price cut mirrors recent moves by rivals Microsoft and Sony.

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Andrew Torgan
CNN Financial News Producer

The Fed today kept interest rates near zero and said the economy is improving. But the central bank also cautioned that ongoing job losses could dampen any economic recovery.

At the conclusion of its two-day meeting, the Fed said in a statement that the government's stimulus and economic rescue actions have helped to stabilize the financial markets, which will help generate economic growth in the future.

In addition, Ben Bernanke & Co. said consumer spending is stabilizing, but that rampant job losses and tight credit have dampened overall household consumption. The Fed also noted recent commodity price increases but said it saw little threat of inflation in the near term.

As a result, policymakers voted to keep the federal funds rate - a key overnight lending rate that guides various consumer and business loans - at a target range of zero to 0.25%. Rates have been at that level since December.

House approves jobless benefits extension

The House approved a bill late Tuesday that could extend jobless benefits to more than 1 million people for an additional 13 weeks.

The bill extends benefits for those living in the 27 states with jobless rates higher than 8.5%, as well as the District of Columbia and Puerto Rico. The legislation now moves to the Senate, where the Democratic leadership has said they will try to address the issue soon. A bill has yet to be introduced.

The national unemployment rate hit 9.7% in August, the highest level in 26 years.

Big banks reduce overdraft fees

Bank of America and JPMorgan Chase say they will reduce overdraft fees and overhaul checking account options amid a backlash over banks' policies on overspending.

Overdraft fees reap banks billions of dollars per year. And as financial system reform remains in national focus, consumers and lawmakers alike have called for banks to revamp their penalties.

Beginning Oct. 19, Bank of America says it will allow customers to opt out of the ability to outspend their accounts, and it will no longer charge fees for more than four items per day or on overdrawn balances of less than $10.

In June, the bank will limit the number of times in a year consumers can overdraw their accounts using debit cards in stores, and new customers will be able to opt out of overdrafts when they open their accounts.

JPMorgan Chase said it will eliminate overdraft fees for debit cards unless customers opt in, and it will cut the maximum amount of overdrafts per day to three from six. It will no longer charge for overdrawn balances of less than $5. Chase customers are already prohibited from withdrawing more cash from an ATM than they have available in their account.

Plans for consumer shield pared back

Financial consumers would have fewer protections than originally envisioned under a draft of a bill being circulated on Capitol Hill.

The latest proposal for a Consumer Financial Protection Agency would no longer require financial institutions to offer a “plain vanilla” version of its products, such as a basic 30-year fixed rate mortgage. That would free lenders to concentrate on selling more sophisticated and expensive products.

The changes were proposed in a memo sent to Democratic members of the House Financial Services Committee late Tuesday by its chairman, Barney Frank.

The financial crisis sparked the idea for the agency, which would help make financial products safer for consumers. Advocates say such an agency could have prevented the subprime mortgage crisis and the resulting financial meltdown.

Same 4-bedroom house… wildly different prices

Say that you’re a mid-level executive living in Grayling, MI, which is known as the “Canoe Capital of the World.”

You live in a 2,200-square-foot, 4-bedroom, 2-1/2 bath home that is now valued at about $123,000 – due to the fact that Grayling is the most affordable housing market in the nation.

One day you get a phone call. You've been offered a job that pays twice as much out in Southern California! You decide to settle in La Jolla - a seaside resort near San Diego.

Now remember that your current house is worth $123,000, and you’d like to move into something similar. So at the risk of sounding like an infomercial: “Now how much would you expect to pay?”

What if I told you that you’re looking at a cool $2.1 million?

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Fed Chairman Ben Bernanke acknowledged the identity theft involving his family.

Andrew Torgan
CNN Financial News Producer

Federal agents have nabbed a woman allegedly involved in a sophisticated identity-theft ring that claimed Fed Chairman Ben Bernanke among its victims, authorities said today.

Shona Michelle Young was arrested at the Airport Villas near Miami International Airport on Monday, said spokesman Barry Golden of the U.S. Marshal's office for the southern district of Florida.

Young is said to be a major check-casher for the identity theft ring, which stole the purse of Fed Chairman Ben Bernanke's wife, Anna, last summer.

Federal agents had earlier tried to arrest Young at her home in Myrtle Beach, South Carolina, but found that she had fled, Golden said.

She was carrying a fake New York state driver's license and Visa debit card, both in the name of Deborah L. Taverna, along with wigs which she used to cash fraudulent checks, Golden said.

Was arrested at the Airport Villas

‘Clunkers’ rush lifts auto sales

The government’s popular “Cash for Clunkers” program gave a strong boost to U.S. auto sales last month, putting the industry on course for its best month this year. But sales dropped sharply in the last week of August after “Clunkers” ended.

Ford says sales rose 17% compared to August 2008, its biggest jump in sales in four years. Still, Ford sales' gain was short of the 22% increase forecast by sales tracker Edmunds.com.

General Motors posted a 20% drop in sales from a year ago - but sales were up 30% from a month ago, thanks to “Clunkers.” Chrysler Group reported a 15% decrease from August ’08 - but compared with July, sales climbed 5%.

Remember that both Chrysler and GM declared bankruptcy this year and received billions in government bailout money. Ford was the sole member of Detroit’s Big Three that neither accepted a bailout nor filed for Chapter 11 protection.

Best month this year

Pending home sales increase

More Americans signed sales contracts to buy homes in July than in June, marking the longest streak of monthly increases on record.

The pending home sales index from the National Association of Realtors rose 3.2% in July after rising by 3.6% in June. That's 12% higher than July 2008, and it marks the sixth straight increase since record-keeping began in 2001.

Signed real estate contracts often take many weeks or months to complete, so they are considered a forward-looking indicator.

Pending home sales index

Inside Madoff's Montauk home: Big views, modest decor

The only thing that's truly spectacular about Bernie Madoff's Montauk, New York beach house is its stunning views of the Atlantic.

The rest of the four bedroom house, which was seized by authorities after its owner was sentenced to 150 years for swindling investors out of billions of dollars, is fairly unremarkable considering its previous occupant's staggering wealth. Think Formica countertops and small bedrooms.

The U.S. Marshal's office announced today that the home will be marketed by noted New York area real estate broker, the Corcoran Group.

The Feds hope the house will fetch at least its listing price of $8.5 million, all of which will go to Madoff's victims.

Four bedroom house

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@AndrewTorganCNN

Andrew Torgan
CNN Financial News Producer

President Obama announced today that he plans to nominate Ben Bernanke to a second term as head of the Federal Reserve, saying Bernanke “brought our economy back from the brink.”

Obama made the announcement this morning from Martha's Vineyard, MA, where he is vacationing.

Bernanke, a Republican who has played a central role in the government's extraordinary response to the recession and 2008 banking panic, will have to be confirmed by the Senate. His current four-year term ends on Jan. 31.

The question of Bernanke's reappointment had been the focus of much speculation. Recently, many economists and insiders had said they believed that he would more than likely keep his job.

Home prices on the upswing

Home prices may be on the road to recovery.

After three years of declines, home prices increased 3% in the three months ended June 30, according to the latest S&P/Case-Shiller report. That is the first quarter-over-quarter improvement in three years.

Prices in the national index are still down 15% compared with the second quarter of 2008, the report said. But that is better than the record 19% decline that was set in the first three months of 2009.

Consumer confidence soars

A key measure of consumer confidence jumped much more than predicted this month as the job market outlook and business expectations improved.

The Conference Board, a New York-based business research group, said Tuesday that its Consumer Confidence Index rose to 54.1 in August from an upwardly-revised 47.4 in July. The measure is closely watched because consumer spending makes up two-thirds of the nation's economic activity.

Despite this month’s increase, the index remains at historically low levels. An overall reading above 90 indicates the economy is solid, and 100 or above signals strong growth.

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A new report shows home sales went up in June.

Andrew Torgan
CNN Financial News Producer

More Americans signed sales contracts to buy homes in June than in the previous month - another encouraging sign for the embattled housing market.

The National Association of Realtors says its Pending Home Sales Index rose 3.6% in June. That’s the fifth straight month of increases and the longest monthly winning streak since July 2003.

The report followed several other recent pieces of good news for the housing industry, including a substantial rise in new home sales, a jump in existing home sales and the first home price increase in nearly three years.

The Pending Home Sales Index tracks signed contracts to purchase previously-owned homes and is considered a barometer for future home sales. Typically there is a one- to two- month lag between a sales contract and a completed deal.

Personal income tumbles, spending up

Personal income fell in June after surging in the previous month on government stimulus, while spending by individuals increased.

The Commerce Dept. says personal income fell 1.3% in June, compared with a revised 1.3% increase in May, when government stimulus boosted social benefits payments and reduced taxes.

The June decrease was the largest drop in personal spending since January 2005, when incomes fell 2.3%. Excluding the impact of the government's economic stimulus, incomes eased 0.1% in June and were essentially flat in May.

Consumer bankruptcies jump 34%

Consumer bankruptcies surged in July to the highest level since October 2005 as American households struggle under the burden of past debt and rising unemployment.

Total filings reached 126,434 in July, a more than 34% increase from the same period a year ago and a nearly 9% increase over June, according to a report released by the American Bankruptcy Institute.

The number of filings was the highest monthly total since the Bankruptcy Abuse Prevention and Consumer Protection Act went into effect in October 2005.

Gallery: Top 10 "clunkers" cars

Finally, we reported Monday that Ford saw a modest increase in July domestic sales - the first monthly sales gain for a major automaker since the financial crisis began. Ford credited the “Cash for Clunkers” program for the boost.

And when it comes to “Clunkers,” Ford benefited from its past sins. The automaker says the vehicle most often traded in was its once popular Explorer SUV, the very vehicle that kicked off the SUV craze in the 1990s.

No doubt many of those Explorer owners remained loyal Ford customers. That’s likely one of the reasons the Ford Focus is the most purchased car under the program.

See the Top 10 most purchased cars under the program here.

Andrew Torgan
CNN Financial News Producer

ExxonMobil posted a 66% decline in second-quarter earnings this morning due to weak energy demand and volatile oil prices.

The world's largest publicly-traded oil company said it earned just under $4 billion in the quarter, down from nearly $12 billion just one a year earlier.

Earnings at Exxon, which reported the largest annual profit in U.S. history last year, have declined this year as oil prices plummeted from 2008's record highs above $147 a barrel.

Oil prices averaged about $60 a barrel in the second quarter of this year, compared with roughly $124 a barrel in the same period in 2008.

Jobless claims increase but trend improves

The number of Americans filing new claims for jobless benefits rose last week, but remains below peak levels reached in the spring.

Initial claims rose by 25,000 to 584,000. But the four-week moving average for new claims, which considered a better gauge of underlying trends as it smoothes out week-to-week volatility, fell by 8,250 to 559,000.

This was the lowest level since late January. The moving average has also declined for five straight weeks.

And the tally of people who continue to get benefits for one week or more fell by 54,000 to 6,197,000 - the lowest level since early April.

Report shows foreclosures may be easing

Sun Belt cities dominated the list of metro areas with the biggest foreclosure problems during the first six months of 2009.

Cities in just four states - California, Florida, Arizona and Nevada - captured 29 of the top 30 places with the highest foreclosure rates, according to a report issued by RealtyTrac. Greeley, CO, was the only outsider, coming in at 29th.

The good news, however, is that some of the worst hit spots - such as the Central Valley cities in California - showed some improvement. Although there is concern that we may just be in a lull before a third wave of foreclosures hits.

It's official: You own a piece of Citigroup

Congratulations! You now own a big chunk of Citigroup.

Although a few housekeeping issues remain, Citigroup effectively completed its long-awaited plan to turn preferred shares owned by the government into common stock on Thursday. That gives U.S. taxpayers a 34% stake in one of the world's largest financial institutions.

But Citi has also earned a reputation as one of the nation's most-troubled financial institutions. From the time the credit markets began to unravel in late 2007 up until the end of last year, the company lost more than $28 billion.

That subsequently led the government to take a $45 billion stake in Citigroup to help stabilize the bank.

Follow the money… on Twitter: @AndrewTorganCNN

Andrew Torgan
CNN Financial News Producer

We got a wave of jobs data this morning ahead of the long holiday weekend – and most of it troubling as the labor market took a step backwards last month.

Employers trimmed 467,000 jobs from their payrolls in June, compared with a revised loss of 322,000 jobs in May. This was the first time in four months that the number of jobs lost rose from the prior month.

The unemployment rate, meanwhile, rose for the ninth straight month - climbing to 9.5% from 9.4% and hitting another 26-year high. But that was actually better than expectations.

However, the report contained even more discouraging data.

The average hourly work week fell to 33 hours in May, the lowest it's been since the Labor Department started keeping records in 1964. That translates into smaller paychecks for workers.

And the number of people out of work for six months or more climbed to nearly 4.4 million - a record high.

The only piece of good news on the labor market came from a separate report showing the tally of newly laid-off workers filing for unemployment insurance dropped last week, a sign job cuts are easing.

Initial claims for jobless benefits fell by 16,000 last week to a seasonally adjusted 614,000.

And the number of Americans continuing to receive unemployment insurance for one week or more dropped by 53,000 to 6.7 million, defying analysts' expectations of a small rise.

Optimism about the economy stalls

A new national poll indicates that nearly half of all Americans think the economy has stabilized, but only one in eight believes that a recovery has started.

Four in 10 questioned in the CNN/Opinion Research Corp. survey released today think the country is still in an economic downturn.

"Although polls in recent months have shown some signs of growing optimism, that appears to have stalled," said CNN Polling Director Keating Holland. "In January, 50% said the economy was in very poor shape; that figure dropped to 37% in April, but now it has risen slightly, to 41%."

"The prevailing view? We're in a stall," said CNN Senior Political Analyst Bill Schneider.

The poll does suggest that when it comes to an economic recovery, Americans agree with President Barack Obama. Discussing the economy last week at a news conference at the White House, Obama said, "We're still not at actual recovery yet. So I anticipate that this is going to be a difficult, difficult year."

Gas prices keep falling ahead of holiday

Gas prices dropped 1-tenth of a cent overnight to $2.629. That’s the 11th straight day of declines.

In the last 11 days the average price has decreased 6.4 cents, or 2.3 percent. The average price of a gallon of gas is also down $1.485, or 36 percent, from the record high price of $4.114 that AAA reported on July 17, 2008.

The highest gas prices are in Hawaii ($3.202). The cheapest are in Missouri ($2.421).

Manhattan home prices plunge

The housing bust has finally clobbered super-pricey Manhattan home prices.

Reports released Thursday by four major New York brokers show that prices cratered during the three months that ended June 30.

Prices fell between 13% and 19% compared with the same quarter last year. The brokers found median prices that ranged from $795,000 to $849,000.

The decline shows a marked turn from the first quarter of 2009, when the year-over-year change in median home prices ranged from a loss of 2% to a gain of 6%.

Another change in the recent period: More people are buying.

The number of sales picked up by more than 28% in the second quarter, due to what the CEO of one real estate brokerage firm called “value-based shopping” by buyers.

Of course, in Manhattan "value" means studio prices that go for a median of $400,000 and one-bedrooms that fetch $650,000.

Andrew Torgan
CNN Financial News Producer

We have new signs this morning that the housing market may finally be hitting bottom.

Home prices continued to tumble in April, falling more than 18% from a year earlier. But the month-over-month change narrowed sharply, indicating that housing markets may be starting to turn a corner.

The 20-city slice of the S&P/Case-Shiller Home Price Index recorded a drop of 0.6% from March to April, compared with a 2.2% drop in the prior month. The index has declined every month since July 2006.

And while S&P’s David Blitzer cautions that one month's data cannot determine if a turnaround has begun, some stabilization may be appearing in some regions.

Consumer confidence drops

On the flip side, however, consumer confidence fell unexpectedly in June after two straight months of gains as Americans' optimism over business and job conditions weakened.

The Conference Board, an industry group, said this morning that its index of consumer attitudes dropped to 49.3 this month from a downwardly revised 54.8 in May. Wall Street was expecting a reading of 55.0 for June.

GM makes its case for 'new GM'

General Motors is set to press a bankruptcy judge today to approve its plan to leave its debt behind as it sells its preferred assets to a "new GM."

GM, which filed for bankruptcy protection on June 1, is trying to win approval to create a new company and shed crushing debt and expensive contracts.

U.S. taxpayers would end up owning 60% of the new GM, with other stakes held by Canadian governments, bondholders and the United Auto Workers union.

Holders of $27 billion in GM bonds would get stock in the reorganized company, as will a union-controlled trust fund that will take stock rather than the $20 billion in cash it had been owed to pay future retiree health care costs. Those 650,000 retirees will have their coverage reduced.

GM also plans to close more than a dozen factories, drop several brands and shut down up to 40% of its network of 6,000 dealerships.

Detroit joblessness tops among big cities

The unemployment crisis is a nationwide concern, but the collapse of the auto industry has made Detroit joblessness particularly painful.

A government report released today shows the Detroit metro area continued to have the highest unemployment rate of large cities, at 14.9%, in May. That number was calculated even before General Motors declared bankruptcy, meaning future reports could be even worse.

The overall report from the Labor Department was also bleak. All 372 metropolitan areas saw unemployment rates tick higher, with 112 cities at 10% or higher, and 15 of those at 15% or more. The highest rate of unemployment for a metro area of any size was in El Centro, Calif., near the Mexican border, at 26.8%.

Andrew Torgan
CNN Financial News Producer

Financial giant’s American Express, J.P. Morgan Chase and Morgan Stanley have all announced plans to issue common stock in the hopes of quickly paying back taxpayer bailout money.

J.P. Morgan and American Express disclosed plans late Monday to sell $5 billion and $500 million worth of stock respectively. Morgan Stanley followed that up this morning with its own plans for a $2.2 billion offering.

J.P. Morgan was one of the first major banks to get government money when it accepted $25 billion from the Treasury Department's $700 billion Troubled Asset Relief Program back in October.

Later that year, American Express morphed itself into a bank holding company in order to gain access to $3.4 billion from the TARP. And Morgan Stanley received $10 billion as part of the program.

Banks must receive formal approval to repay bailout funds after they have satisfied government requirements. The Fed is expected to announce next week which of the 19 major banks that it ran its so-called stress tests will be allowed to pay back their loans.

In a related development, Bank of America says it’s nearly finished raising the $33.9 billion in capital that regulators said it needed to shield itself from future losses.

The nation's biggest lender by assets says it’s raised almost $33 billion since the government announced the results the stress tests nearly a month ago.

GM unloads Hummer

General Motors says it’s signed a deal to sell its Hummer unit, just one day after filing for bankruptcy.

But GM would not identify the buyer nor name a price, saying only that the deal would close by the end of September. GM revealed in April that it was courting three serious offers for the Hummer brand.

Separately, GM will have access to $15 billion dollars in government funds immediately - and up to 33-billion as needed - pending a final court hearing later this month.

And later today we’ll see just how much damage GM’s impending bankruptcy did to its sales last month. We’ll be getting U.S. car and truck sales figures for May from the major automakers throughout the day - and they’re not expected to be pretty.

Pending home sales rebound

The number of home sales contracts signed in April continued to bounce back from record lows hit last winter, posting the third consecutive month of gains.

The National Association of Realtors says its Pending Home Sales Index rose 6.7% in April after jumping 3.2% in March. That was well above the forecasts of a 0.5% increase.

Pending home sales are a forward-looking indicator since many of the contracts don't result in completed deals for many weeks or months.

Gas prices keep climbing

Gasoline prices rose 1.3-cent to $2.525 overnight, the 35th straight increase.

In the last 35 days, the average price of gas has increased 47.7 cents. But gas is still below the all-time high of $4.114 that AAA reported on July 17, 2008.

The highest gas prices are in Alaska ($2.768). The cheapest gas prices are in South Carolina ($2.333).

States feel auto pain

Finally, the downfall of the American auto industry is wreaking havoc on state and local budgets from coast to coast.

The decline in auto dealerships, coupled with the drop in car sales, is costing states and municipalities millions of dollars in lost sales taxes, not to mention lost income and property taxes and other fees.

Although exact numbers aren't available, car purchases account for about 12% to 15% of sales tax revenues in many states, according to estimates from the Center on Budget and Policy Priorities. And sales taxes usually account for about one-third of a state's revenue.

As the recession deepens, state tax revenues have fallen off a cliff. This has opened up yawning gaps, forcing officials to scramble to balance their budgets.

Andrew Torgan
CNN Financial News Producer

The Treasury Department and a committee of major bondholders at General Motors have reached a deal that could give creditors a larger stake in GM than previously offered - as long as they agree not to fight the government's plans for a quick bankruptcy at GM.

The agreement, revealed in a SEC filing by GM early today, would essentially give the bondholders 10% of the company but also give them the rights to buy an additional 15% of the company's stock at a low price.

The deal is unlikely to allow GM to avoid bankruptcy, however.

In fact, the new offer is structured so that the assets of GM that would remain in bankruptcy would receive a 10% stake in a "new GM" that would be used to pay bondholders. The “old GM” would also technically receive the right to buy the 15% stake in the new company that emerges from bankruptcy.

Auto-parts maker files for bankruptcy

With Chrysler already in bankruptcy and General Motors still teetering on the brink, we’re seeing the ripple effect in the auto-parts industry. Visteon filed for bankruptcy protection yesterday after revenue fell amid a global slump in vehicle sales.

The former unit of Ford said U.S. parts sales plunged 37% through April, with sales at Ford - Visteon’s largest customer - dropping 40%.

The auto-parts industry employs more workers in the United States than the automakers - about 500,000 of them. In addition, most of the big suppliers have contracts with multiple automakers. And since most make unique parts for the automakers, a closing can rapidly halt operations at auto plants.

Mixed news on the jobs front

New applications for jobless benefits dropped last week, a sign that companies are cutting fewer workers, but the number of unemployed workers continuing to get benefits climbed to a new record high.

First-time claims for unemployment insurance fell by 13,000 to 623,000 from the previous week’s revised figure of 636,000.

But the number of people receiving benefits for one week or more rose by 110,000 to just under 6.8 million. That’s the highest number on records dating back to 1967.

Durable Goods orders jump

Also on the economic front, demand for big-ticket manufactured items like cars and refrigerators soared by the largest amount in 16 months in April, the second increase in the past three months.

Orders for durable goods increased by 1.9 percent in April, more than four times the 0.4 percent increase that had been expected.

But the government also revised its estimate for new orders in March to show a drop of 2.1 percent, a much bigger fall than the 0.8 percent decline previously reported.

New home sales edge up

Sales of newly constructed homes edged up slightly in April from a downwardly revised reading the prior month.

The Commerce Department says new home sales ticked up 0.3% last month to a seasonally adjusted annual rate of 352,000. But that’s still 34% below the same month a year ago.

One bright spot: The median sales price of new homes rose to $209,700 in April, up nearly 4%.

Gas prices up again

Gas prices rose 1.5-cents to $2.449 overnight, the 30th straight increase

In the last 30 days, the average price of gas has increased 40.1 cents, or 19.5 percent.

But gas is still well below where it was one year ago today ($3.944) as well as the all-time high of $4.114 that AAA reported on July 17, 2008.

The highest gas prices are in Alaska ($2.739). The cheapest gas prices are in South Carolina ($2.271).

Andrew Torgan
CNN Financial News Producer

Big developments today for two of Detroit’s Big Three.

General Motors says it’s fallen far short of the bondholder support it needed for its proposed debt-for-stock offer, virtually guaranteeing that the nation's largest automaker will be forced to file for bankruptcy court protection within the next five days.

And in a sign that a bankruptcy filing could come as early as Friday, GM moved up the pay date for its employees this week.

Hourly employees represented by the UAW were paid today and salaried employees will be paid on Thursday. Both normally would have been paid on Friday.

Chrysler in court

It’s is judgment day for Chrysler and hundreds of auto dealers. A federal judge in Chrysler’s Chapter 11 case could decide today whether to give the automaker permission to sell the bulk of its assets to a group headed by Italy's Fiat in the hope of saving itself from liquidation.

Lawyers for Chrysler say the Fiat deal is the company's only hope to avoid being sold off in pieces, but more than 300 objections to the sale have been filed by the carmaker's dealers, bondholders and former employees.

But if the deal doesn't close by June 15, Fiat could back out.

Economists see recession ending this year

A group of leading economists say the end of the recession is in sight.

But while the economy is showing signs of stabilizing, the recovery will be more moderate than is typical following a severe downturn, the National Association for Business Economics said in a report released this morning.

The panel of 45 economists said it expects economic growth will rebound in the second half of 2009. However, the group still expects to see a decline in second-quarter economic activity.

Home sales inch up

The residential real estate market picked up slightly in April, as increasingly affordable home prices attracted wary buyers.

The National Association of Realtors reported that sales of previously-owned homes ticked up nearly 3% last month to a seasonally adjusted annual rate of 4.68 million units, compared to the revised rate of 4.55 million in March.

Sales came in slightly ahead of expert forecasts of 4.66 million annual units but are still off 3.5% from the 4.85 sold 12 months ago.

First-time homebuyers continued to drive sales but there was also a seasonal rise of repeat buyers. Additionally, the median price of homes sold in April was just $170,200, a more than15% year-over-year drop.

Crude tops $63 per barrel

Crude oil prices climbed above $63 per barrel today after a Saudi oil minister said the global economy has strengthened enough to cope with oil at $75-$80 a barrel and that level will be hit soon as fuel demand picks up.

Oil has already climbed from a low of $32.40 last December to six-month highs well above $60 a barrel this week.

Still, crude remains well below the all-time high of $147 per barrel that it hit last July.

Gas approaching $2.50 per gallon

Gas prices rose 9-tenths of a cent to $2.434 overnight, the 29th straight increase.

In the last 29 days, the average price of gas has increased 38.6 cents, or 18.8 percent. But gas is still well below the record high price of $4.114 that AAA reported on July 17, 2008.

The highest gas prices are in Alaska ($2.727). The cheapest gas prices are in Missouri ($2.274).

Andrew Torgan
CNN Financial News Producer

It’s coming down to the wire for General Motors.

With GM rapidly burning through its cash reserves due to hefty losses amid an historic slump in auto sales, President Obama said the Treasury Department would give the automaker the cash it needs to continue operations on the condition that GM restructure its debt or file for bankruptcy by June 1.

And the automaker a midnight deadline for its bondholders to reach a restructuring agreement.

GM’s chief executive officer Fritz Henderson has repeatedly said that the difficulty in inking a deal makes a bankruptcy filing for the automaker "probable."

A spokeswoman for GM last week said the company continues to plan for a bankruptcy, which is the likely next step if no agreement is reached.

Chrysler, dealers on edge

And Wednesday is judgment day for Chrysler and hundreds of auto dealers, when their fate could be decided in bankruptcy court. But some experts think it's already a done deal.

The federal judge in Chrysler Chapter 11 case could decide on May 27 whether the automaker can pull its choice assets - its best-performing factories and dealerships - out of bankruptcy and sell them to a newly-formed incarnation of itself, called Chrysler Group.

The new Chrysler Group would be controlled primarily by a trust fund used to pay future health care expenses for the UAW, which will own the majority share of 55%. Italian automaker Fiat will own 20%, at least initially, though it could eventually increase its share to 35%. Minority stakes would go to governments: 8% for the U.S. and 2% for Canada.

Home prices keep getting clobbered.

More troubling news on the housing front today. The S&P/Case-Shiller National Home Price Index shows a more than 19% decline in prices in the first quarter of 2009 compared with the first quarter of 2008. That’s the largest decline in the measure’s 21-year history.

Home prices have fallen more than 32% since peaking in the second quarter of 2006 and are at levels not seen since the end of 2002.

Sun-Belt cities still had the largest year-over-year declines in March, with Phoenix prices down 36%, Las Vegas off 31.2% and San Francisco dropping 30.1%.

Two cities have now have fallen more than 50% from their peak prices: Phoenix is down 53% since June 2006 and Las Vegas is off 50.4% from its August 2006 high. Dallas prices suffered the smallest loss from peak, just 11.1% since June 2007.

Gas prices keep climbing

The end of the long holiday weekend brings gasoline prices ever closer to $2.50 per gallon.

Gas rose 1-tenth of a cent to $2.425 overnight, the 28th straight increase. In the last 28 days, the average price of gas has increased 37.7 cents, or 18.4 percent.

But gas is still down $1.68, or 41.0%, from the record high price of $4.114 that AAA reported on July 17, 2008.

The highest gas prices are in Alaska ($2.737). The cheapest gas prices are in Missouri ($2.270).

Consumer Confidence sparks a rally on Wall Street

Stocks soared in the first hour of trading, following a choppy open, after an upbeat consumer confidence report raised hopes that the economy is stabilizing.

The gains came despite that dismal housing report, concerns about North Korea’s nuclear program and the fate of General Motors and Chrysler.

Stocks ended last week essentially flat, but economic worries continue to hang over investors, who are coming back from the long weekend.

Gene Bloch
Managing Editor
CNN New York

A stark sign this morning that the housing market is not yet out of the woods. The Commerce Department reporting new home construction plunged 12.8% in April to a record low, as rising unemployment and mounting foreclosures slammed new projects. A plunge in new apartment projects led the decline. Applications for new permits fell as well, indicating the rough patch for housing is likely to continue. The news underscores the recession is still taking its toll.

The upside of the housing decline is, of course, lower prices for homebuyers. Homes are, in fact, at their most affordable in two decades.

A big announcement today on one of the most important energy and environmental issues, fuel economy standards. The Obama administration today is setting new CAFE (Corporate Average Fuel Economy) standards in an effort to reduce fuel emissions. The plan will require cars and light trucks to get an overall average of 35.5 miles per gallon by 2016, according to a senior administration official with knowledge of the plan. Cars will be required to average 39 mpg, and for light trucks the number will be 30 mpg. There is a 1215p announcement from President Obama, who will be joined by Calif. Gov. Arnold Schwarzenegger and Michigan Gov. Jennifer Granholm, who have played major roles in the policy (think environment and industry).

The announcement comes as we’ve seen gas prices rising for 3-weeks straight. AAA reported a 3-tenths of one cent increase in regular unleaded, which brings the price to $2.314 a gallon.

And more auto news – Daimler AG and Tesla Motors are pairing up to build electric cars. As part of the agreement, German automaker Daimler said it had acquired an equity stake of nearly 10% in San Carlos, Calif.-based Tesla Motors. Tesla designs and manufactures electric vehicles. Its battery-powered Roadster is the only highway-capable production electric vehicle for sale in North America and Europe.

As Washington moves to clamp down on the credit card industry – the industry may be ending the free ride for its best customers. According to the New York Times, card companies are considering a number of steps to keep its revenues up, including reviving annual fees, cutting back on cash-back and other rewards programs, and slapping interest rate charges on accounts immediately instead of allowing a grace period. For years, people who have paid on time have gotten a good deal. Is that soon ending?

On CNNMoney:

YOUR MONEY

A report card for your 401(k) plan. Want to know how your company's retirement plan compares with others? It's not easy to find out. But here are a few things you can try.

* How to solve the financial crisis. Cornell economist Robert H. Frank explains why a culture of excessive risk taking flourished – and what might push everyone from money managers to homebuyers to act more prudently.

* Investor Daily: Value investing in health care stocks

JOBS

* Ask Annie: Don't let ID thieves hijack your job hunt. Scammers increasingly are targeting job seekers; here are 6 ways to protect yourself.

COMPANIES: Features

* Hitting the wall. Companies of every stripe are filing for bankruptcy or getting perilously close – and they're not just in Detroit or on Wall Street. Take a look at an array of companies that are fighting to live another day or have gone belly-up in recent months.

TECHNOLOGY

* Who will get caught in antitrust net?

SMALL BUSINESS

* Emergency small business loans coming in June. To kick off National Small Business Week, the government announced its timetable for a hotly awaited assistance program.

* How 5 small businesses are faring? Before the holidays, six business owners shared their stories about surviving the economy. They each had hopeful expectations for the winter and the spring. Go to CNNMoney.com to see how they fared.

As CNN prepares to mark President Obama’s first 100 days in office, we'll also have a detailed look at his wide-ranging initiatives intended to stem the economic downturn and financial crisis.

Andrew Torgan
CNN Financial News Producer

Government regulators have reportedly told Bank of America and Citigroup that both banks need to increase their capital reserves based on preliminary "stress test" results.

The capital shortfall at Bank of America could amount to billions of dollars, the Wall Street Journal said, citing people familiar with the situation.

Executives at both banks are said to be objecting to the preliminary findings, which emerged from the government's scrutiny of 19 large financial institutions. The two banks are reportedly planning to respond with detailed rebuttals, with Bank of America's appeal expected some time today.

The government conducted the so-called “stress tests” on 19 of the nation's biggest banks to determine which banks are healthy enough to survive another financial shock and which will need additional government support.

The findings suggest that government officials are using the tests to send a tough message to troubled banks. Results of the “stress tests” will be made public on May 4.

Surprise jump in consumer confidence

Consumer confidence soared in April amid signs that the economy may be starting to stabilize.

The Conference Board says its Consumer Confidence Index rose more than 12 points to 39.2, up from a revised 26.9 in March. The reading marks the highest point since November and trounces estimates.

And the Expectations Index, which measures how shoppers feel about the economy over the next six months, skyrocketed to 49.5 from 30.2 in March.

Home prices down

The weak housing market continued to plague home sellers in February as home prices extended their losing streak to 31 consecutive months.

However, the rate of decline slowed, with the S&P/Case-Shiller Home Price Index failing to hit a record low for the first time in 16 months.

The index fell 18.6% from February 2008, slightly better than the 19 percent in January. The 10-city index slid 18.8 percent, compared to 19.4 percent the month before.

But the good news was mixed. All 20 cities in the report showed monthly and annual price declines, and half recorded annual records.

No city I the index has fared as poorly as Phoenix, where prices have fallen 35.2% over the past 12 months and 4.5% in January. Prices are also down 51% from their peak.

Home ownership rate declines

The national home ownership rate fell in the first quarter to its lowest level in nine years, with the biggest drops among younger buyers who rode the wave of easily-accessible credit that fueled the housing boom.

The seasonally-adjusted home ownership rate was 67.5% in the first quarter of this year, down half a percentage point since the first quarter of 2008, according to the Census Bureau. That’s the lowest rate since the second quarter of 2000.

Chrysler reaches deal on debt

The major banks that loaned Chrysler about $7 billion have agreed to significantly reduce that debt, according to the Treasury Department, a move that could save the struggling automaker from having to file for bankruptcy later this week.

"The agreement from Chrysler's principal banks is an exceptional accomplishment in line with the President's firm commitment that all stakeholders sacrifice to make this deal succeed," an administration official told CNN Tuesday.

The company still needs to win a rank-and-file ratification vote Wednesday of a tentative labor deal reached with leadership of the United Auto Workers union late Sunday, and wrap up an alliance with Italian automaker Fiat before the Thursday deadline set by the federal government.

But the deal with lenders was generally thought to be the most difficult hurdle the company had to clear in the final week before the deadline.

Details of the debt reduction deal were not immediately available. The Washington Post reported that creditors agreed to cut the $6.9 billion in secured loans owed to them to $2 billion in return for an equity stake in a reorganized Chrysler.

Stocks struggle

Stocks on Wall Street dropped at the open as investors worried about the results of the government's “stress tests” of banks and the number of swine flu cases continued to rise.

But that better-than-expected reading of consumer confidence helped push the Dow Industrials back into the plus column.

Stocks rallied for six straight weeks on bets that the worst for the economy has already happened, then seesawed last week as corporate earnings season kicked into high gear.

First 100 Days: The economy

Finally, as CNN prepares to mark President Obama’s first 100 days in office, CNNMoney.com has a detailed look at his wide-ranging initiatives intended to stem the economic downturn and financial crisis.