Cityfile: New York's Most Notable and Influential

Is that economic improvement we see? The Labor Department announced today that the unemployment rate dropped from 9.5 percent to 9.4 percent last month—even though analysts had been expecting it to increase—and while 247,000 American jobs were lost during July, that's the fewest number of losses since last August. It this evidence that things are going to be peachy keen from here on out? Not really. More

AIG Is Now an ATM | AIG has been a big disaster the last few months, hasn't it? Not if you happen to work for Morgan Stanley, Deutsche Bank, or BlackRock, or any of the other dozen or so banks and law firms expected to rake in as much as $1 billion breaking apart the insurance giant. But at least one firm involved in the process is making it clear that they see this as a civic mission—not just a convenient way to generate fat fees. The law firm Davis Polk & Wardwell has generously offered up a 10 percent discount on its services, so it's only billing the federal government $950 an hour for legal advice. Thanks, guys! [WSJ]

AIG Not the Resume-Killer You Expected It to Be | Mayor Bloomberg's pick to be the city's new finance commissioner is David Frankel, "a former managing director at Morgan Stanley" and former "senior vice president at a unit of American International Group." Now there's a confidence builder! [NYT/Dealbook]

• Just in case you've missed the excitement on TV, Ben Bernanke appeared on Capitol Hill today to testify about Bank of America's acquisition of Merrill Lynch. Lawmakers grilled him, Bernanke played defense: quality entertainment as usual! [NYT, WSJ]
• Financier Allen Stanford appeared in court today and pleaded not guilty to charges he swindled investors out of $7 billion. [WSJ]
• The job market hasn't improved: The number of Americans filing jobless claims rose last week to the highest level in more than a month. [CNN]
• Good news! AIG is reducing its debt with the Fed by $25 billion. [NYT]
• Andrew Cuomo is recusing himself from the investigation into the hedge fund that handed his finances and is now tied to Cuomo's kickback query. [BN]

The financial collapse has gifted us with some first-class public relations kerfuffles—those bonuses at AIG and the big three automakers arriving in DC via private jet, to name just two—and there might be another one on the horizon. AIG is giving the survivors of the Miracle on the Hudson plane crash a hard time about reimbursing them for their lost property, medical care and therapy bills.More

AIG Unloads Downtown Real Estate | Good news from AIG headquarters: The scandal-ridden insurance company is close to ironing out a deal to sell its two buildings downtown, 70 Pine and 72 Wall Street. The buyer, which is expected to pay around $100 million for the property, is an overseas company with plans to turn the towers into a residential/retail development. [NYP]

• As expected, General Motors filed for bankruptcy protection this morning, citing more than $172 billion in debts. [WSJ, NYT, CNN, BN]
• Despite GM's filing, stocks managed to post gains on Monday morning. [NYT]
• Consumer spending fell for the second straight month in April. [AP]
• Another Bank of America board member stepped down on Friday. [NYT]
• AIG is supposedly looking to get back some of the millions it has handed out to charity so the money can be better spent paying out bonuses. [NYP]
• Banks are planning to fight Washington's threat of increased regulation. [NYT]
• GM and Citi have been booted from the Dow Jones Industrial Average. [BN]

Another Failed CEO Bites the Bullet | Yesterday it was revealed that former Lehman chief Dick Fuld had stepped down as the bankrupt firm's chairman. Now another symbol of the economic collapse is heading off into the sunset. Ed Liddy, the chairman and CEO of AIG, has announced plans to step down from the scandal-plagued insurance giant, although he may be there for a while considering he plans to remain here until the company comes up with a suitable replacement. The good news? There is now a little bit of light at the end of Liddy's dark tunnel, and he should have a chance to trade the self-tanning mist in his office for some real sun in the near future. [NYT]

• 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]More

• 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]More

• 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]More

• 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] More

• 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] More

• 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]More

• 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] More