Plus: Obama on Tax Havens, Chrysler Assets Approved for Auction, Britain Bouncing Back and MORE.

10 Stress-tested Banks Ordered to Raise $75 Billion
After subjecting 19 of the nation’s biggest banks, which accounted for most of the industry’s total loans, to a so-called stress test, federal regulators ordered 10 of them to raise a total of $75 billion in extra capital by November. These banks have until June 8 to submit plans for raising the money. The rest were given a clean bill of health.

The stress test measured potential losses on mortgages, commercial loans, securities and other assets held by the tested bank. In the worst-case scenario — an unemployment rate of 10.3 in 2010, an economic contraction of 3.3 percent this year and a 22 percent further decline in housing prices — the losses by the 19 banks could total $600 billion this year and next, regulators concluded.

Experts warn that the tests could make loans harder to come by for consumers and businesses. “That’s because the government’s intense focus on thicker capital cushions might prompt banks to hoard cash and further curtail lending,” Jim Eckenrode, banking research executive at TowerGroup, told the Wall Street Journal (subscription required).

Analysts also say that while most of the banks needing capital are likely to find it, a few will end up largely owned by the government. RBC Capital Markets analysts estimate that 60 percent of the top United States banks not included in the stress tests would need to raise new capital based on the Fed’s loss assumptions.

Chrysler’s Assets Auction Approved
Chrysler LLC received approval from the judge overseeing the automaker’s bankruptcy on Tuesday to auction most of its assets by May 27. “The judge’s decision was a victory for Chrysler and the government, which together argued that a speedy sale was the only way to protect tens of thousands of jobs and help along the American economy,” the New York Times says.

Fiat SpA’s $2 billion offer for most of Chrysler’s assets will be the lead bid in the auction. At the request of its creditors’ committee, Chrysler extended the sale process and put the deadline for competing bids at May 20. The winning bid will be approved at a May 27 hearing. “Chrysler’s proposed sale to an entity owned by Fiat, a union benefit trust, the U.S. Treasury and the Canadian government would help create the world’s sixth-largest carmaker if completed,” Bloomberg News adds.

To help Chrysler reorganize, the U.S. Treasury is giving the company a $4.5 billion bankruptcy loan. Loan terms require the carmaker to complete an asset sale to Fiat or close another comparable deal in less than 60 days. After the auction, the sale must be closed by June 15.

GM Loses $6 Billion in Q1
General Motors Corp. on Thursday reported a net earnings loss of $6 billion in the first quarter, slightly less than most analysts’ expectations of a loss of more than $6.7 billion. “The drop in revenue was primarily due to GM’s production volume decline of 903,000 units, or approximately 40 percent, on a global basis year-over-year,” the company said in a statement.

While GM’s sales slumped in the U.S., its China business hit a new record last month as vehicles sales shot up 50 percent from a year earlier. GM and its Chinese joint ventures sold 151,084, and the company aims to double its sales in China to more than 2 million vehicles over the next five years. It also hopes to launch more than 30 new or upgraded models during that time.

Back in the U.S., GM faces a June 1 deadline to complete a major restructuring plan or be forced to follow its rival Chrysler into bankruptcy court. The company’s China subsidiary, however, remains self-sufficient and is unlikely to be affected.

Obama Cracks Down on Offshore Tax Havens
President Barack Obama asked for a major change in the tax code Tuesday to stop companies and individuals from using offshore tax shelters. The president argues U.S. multinational corporations paid only $16 billion in taxes in 2004 on $700 billion in overseas earnings — equal to a 2.3 percent tax rate. “The president’s plan would limit the ability of U.S. companies to defer paying U.S. taxes on overseas profits. At the same time, Obama would step up efforts to go after evaders who abuse offshore tax shelters,” the Associated Press reports

According to Obama, the tax loophole lets “some of our largest companies tell the [Internal Revenue Service] that they’re paying taxes abroad, tell foreign governments they’re paying taxes elsewhere and avoid paying taxes anywhere,” Agence France-Presse reports. “I want to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens.”

Obama’s plan would force U.S. firms to report foreign subsidiaries as separate companies to the IRS, rather than hide them in offshore addresses. This would raise up to $95.2 billion in the next 10 years. The White House estimates that $210 billion would be raised in total with Obama’s proposed changes.

Forbes reports the proposals “would raise tax revenue, and that means businesses — which would be footing the bill — were quick to cry foul.” The U.S. Chamber of Commerce, the National Association of Manufacturers (NAM) and National Foreign Trade Council (NFTC) were “quick to condemn the plan.” Cathy Schultz, the vice president for tax policy of the NFTC, said the “proposal ‘would saddle U.S.-based multinational companies with what amounts to a tax increase at a time when they are doing all they can to remain competitive and protect and grow U.S. jobs.’”

In a statement from NAM, NAM President John Engler offered “his strong opposition to President Obama’s proposals to change rules governing the taxation of foreign earnings of U.S. companies, saying the plan would seriously damage U.S. competitiveness and cost jobs.”

Labor Market Deterioration Slowing
The ADP Employer Services survey, which tracks private non-farm employment, revealed 491,000 private sector job losses in April. This is significantly lower than the 708,000 job cuts in March and the 645,000 projected private sector job cuts this month. According to ADP, the services sector shed 229,000 jobs while the goods-producing sector cut 262,000 jobs.

The Department of Labor also posted Thursday a decrease in initial job claims for the week ending May 2. Initial claims fell by 34,000 to 601,000. The four-week moving average was 623,500, a drop of 14,750 from the previous week’s revised average of 638,250. First-time claims for state unemployment benefits fell to the lowest level since late January, but ongoing claims continue to reach record highs. For the week ending April 25, continuing claims jumped 56,000 to 6.35 million. The four-week average also hit another record high of 6.21 million.

Still, experts are optimistic about the slowing pace of U.S. job losses. “All statistics released recently point to a less pronounced deterioration in the labor market in April,” said Natixis bank economist Marie-Pierre Ripert to IndustryWeek. According to a report by global outplacement consultancy Challenger, Gray & Christmas, Inc., planned job cuts by U.S. employers totaled 132,590 in April, a 12 percent drop from 150,411 layoffs recorded in March.

Britain Beginning to Bounce Back?
Recent reports show signs the British economy may be starting to pull out of its downward spiral. After contracting in the first quarter at the fastest pace since 1979, U.K. manufacturing contracted at the slowest pace in eight months in April, Bloomberg News reports. A gauge based on a survey of factories climbed to 42.9 from a revised 39.5 the previous month, the Chartered Institute of Purchasing and Supply and Markit Economics said. Consumer confidence last month also rose to the highest in a year, and the pace of house-price declines is slowing.

“The data has again provided some positive surprises,” James Knightley, an economist at ING Financial Markets, told Bloomberg News. “There are still tough questions regarding how sustainable this turn in the data is.”

The rest of the European Union is expected to stay sluggish, despite some “positive signals.” “We are no longer in a free-fall, but even if some positive signals are appearing, we do not have the critical mass of data to say that we are out of the woods,” EU Economic and Monetary Affairs Commissioner Joaquin Almunia said (via IndustryWeek). According to estimates by the EU’s executive arm, the EU economy will contract 4 percent this year and the recession will drag into 2010 when the Eurozone and EU economies shrink another 0.1 percent.