Friday's Headlines: General Motors

(At 6:34 a.m. EDT)

Friday's Early Headlines

¿ BankUnited Becomes Largest Bank Failure in 2009. - BankUnited ( BKUNA) was seized late Thursday by the Office of Thrift Supervision, which said the Florida bank "was critically undercapitalized and in an unsafe condition to conduct business." The Federal Deposit Insurance Corp. estimated that the cost to its deposit insurance fund will be $4.9 billion.

¿ U.S. Steering GM into Bankruptcy. - The Washington Post reported Friday that the Obama administration is preparing to send General Motors ( GM) into bankruptcy under a plan that would give the automaker tens of billions of dollars more in public financing. The report, which cited sources familiar with the discussions, said GM would receive nearly $30 billion in federal loans under the drafted plan. After surging 32% Thursday, GM shares were a penny higher at $1.93 in Friday's premarket session.

¿ TARP Warrant Sale Could Help Banks, Hurt Taxpayers. - Bloomberg reported Friday that banks negotiating to reclaim stock warrants they granted in return for Troubled Asset Relief Program, or TARP, money may shortchange taxpayers by almost $10 billion if the first sale is any indication. While 17 financial institutions have repaid TARP funds, only one has come to terms with the U.S. on the value of the rights to buy stock that taxpayers received for the risk of recapitalizing the industry, Bloomberg said. Old National Bancorp ( ONB) gave the Treasury Department $1.2 million for warrants that may have been worth $5.81 million, according to Bloomberg's data.

¿ Bank of Japan's View of Economy Improving. - Japan's central bank modestly upgraded its economic assessment Friday, saying the economy was still deteriorating, but exports and production are beginning to level out. It was the first time the Bank of Japan raised its assessment of the economy in nearly three years.

¿ AIG CEO Liddy To Step Down. - Edward Liddy, the chairman and CEO of embattled insurer American International Group ( AIG), said late Thursday he will leave once his board has found a replacement. Liddy took the position in September following the government's emergency bailout of AIG.

¿ BlackRock Co-Founder to Lead Evercore. - BlackRock ( BLK) co-founder Ralph Schlosstein is expected to take over as CEO of Evercore Partners ( EVR) from Roger Altman, according to The Wall Street Journal. Altman will remain as executive chairman but give up daily management of the firm. The planned changes, which have yet to be approved by Evercore's board, are designed to expand the firm's asset-management unit and other areas outside its core advisory practice, the Journal reported.

¿ U.K Government Refuses to Release Stress Tests. - Bloomberg reported Friday that the U.K. Treasury has refused to release the results of stress tests conducted on British banks Royal Bank of Scotland ( RBS) and Lloyds Banking ( LYG). Publishing the information may increase instability and force the government to take further action to shore up the U.K. financial system, the Treasury said in response to a Freedom of Information Act request by Bloomberg.

Earnings and Economic News

There are few earnings reports scheduled for release Friday, and the economic docket is completely bare. However, investors were still sifting through quarterly earnings releases from late Thursday, several of them retail-related.

¿ Sears Swings to an Unexpected Profit. - Excluding one-time items, Sears Holdings ( SHLD) reported a profit of 38 cents a share, even as sales fell more than 9% from a year ago to $10 billion. Analysts surveyed by Thomson Reuters expected the retailer to lose 88 cents a share on revenue of $10 billion. Shares were surging nearly 25% ahead of Friday's opening bell.

¿ Gap Reports 14% Drop in First-Quarter Earnings. - Gap ( GPS) said late Thursday it earned $215 million, or 31 cents a share, in the first quarter, down from the year-ago profit of $249 million, or 34 cents a share. Revenue dropped 8% from last year to $3.13 billion. Earnings results still narrowly beat Wall Street's targets, although revenue came up short of estimates.

Among other retailers, Aeropostale ( ARO), Dress Barn ( DBRN), Foot Locker ( FL), and Pacific Sunwear ( PSUN) all reported better-than-expected earnings for the last quarter.

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