Financial Dispatch: Banks & jobs rule the day

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Andrew Torgan
CNN Financial News Producer

Even though the government won’t publicly reveal the results of the bank “stress tests” until Thursday, numerous leaks are painting a troubling picture for some of the nation’s largest financial institutions.

According to several reports, regulators have determined that Bank of America may need roughly $34 billion in capital to weather a more painful economic environment. A company spokesman declined to comment.

Bank of America has received extensive assistance from the government to date, taking in $45 billion in taxpayer funds. A potential capital shortfall of this magnitude is certain to increase the pressure on CEO Ken Lewis, whom shareholders ousted as chairman of the bank last week.

Reports out Tuesday indicated that the government will direct more than half of the 19 banks that underwent the tests to boost their capital reserves, a move that officials hope will quell fears about the solvency of the financial sector.

New signs of life in the job market

The pace of job losses may be slowing, according to two private reports released this morning.

Payroll-processing firm Automatic Data Processing said private-sector employment decreased by 491,000 in April, a 31% improvement from the revised 708,000 drop in March. Economists surveyed by Briefing.com had expected a loss of 643,000 jobs last month.

Separately, outplacement firm Challenger, Gray & Christmas reported that the number of layoffs announced in April fell for the third straight month.

Job cut announcements by employers totaled 132,590 in April, an improvement of 12% from March's 150,411 cuts. It was the lowest total since last October, according to Challenger, but the April figure was still 47% higher than job cuts announced in the same month a year ago.

The government will release its close-watched monthly employment report on Friday. Current estimates are for a loss of more than 600,000 jobs in April, while the unemployment rate is forecast to jump to 8.9%.

Chrysler won't repay bailout money

Chrysler will not repay U.S. taxpayers more than $7 billion in bailout money it received earlier this year and as part of its bankruptcy filing.

This revelation - buried within Chrysler's bankruptcy filings last week - was confirmed by the White House Tuesday. The filings included a list of business assumptions from one of the company's key financial advisors in the bankruptcy case.

Some of the assumptions listed were that the Treasury Dept. would forgive a $4 billion bridge loan given to Chrysler in the closing days of the Bush administration, a $300 million fee on that loan, and the $3.2 billion in financing approved last week by the Obama Administration to fund Chrysler's operations during bankruptcy.

An administration official confirmed that Chrysler won't be repaying the loans, though a portion of the bridge loan may be recovered by Treasury from the assets of Chrysler Financial, the former credit arm of the automaker, which is essentially going out of business as part of the reorganization.

Twenty percent of homeowners ‘underwater’

More than 20% of American homeowners owe more on their mortgage debt than they can sell their homes for, according to an industry report released today.

Real estate Web site Zillow.com reported that 21.8% of all homes, representing more than 16 million residences, were in a "negative equity" or "underwater" position after prices dropped more than 14% nationally in the year ended March 31.

Hardest-hit markets include Las Vegas - where a whopping 67.2% of homeowners would have to bring cash to the table if they sold their homes - and Stockton, Calif., where 51.1% of homes are underwater.

Millionaires don't feel so rich: survey

Finally, who wants to be a millionaire when nearly half of them don't even feel rich?

Of the 1,012 participants in an annual Fidelity Investments study, 46% said they "do not feel wealthy and are taking action to reassess and rebuild their wealth."

That's a big change from last year, when only 19% said they didn't feel rich. Fidelity blamed the drop on the corresponding plunge in wealth, with an average 19% reduction in household income and inevitable assets, and a 28% plunge in real estate holdings.

Fidelity described the average respondent as having $3.5 million in assets and $306,000 in annual household income.