Good morning! Three big stories this morning:

1) Citigroup posted a first-quarter net profit today. As manysourcesnote, one major factor is an accounting change that allows companies to record the market value of their debt as unrealized gain. That won Citi $2.5 billion in paper gains: They posted a $1.6 billion profit. Calculated Risk wonders, "So when do they pay back the TARP money?"

2) The New York Times reports that AIG CEO Edward Liddy owns a significant stake in Goldman Sachs. Goldman is, the Times notes, "one of the biggest beneficiaries of the government rescue" of AIG.

3) Steve Rattner, who heads up the administration’s auto task force, has emerged in a growing state and federal investigation of New York state’s pension fund. SEC documents reportedly describe him as arranging for his investment firm to pay $1.1 million to strike a deal with the fund. Such fees, the Washington Post reports, are "common industry practice and not illegal." But an explicit pay-to-play scheme is illegal, so the investigation hinges on why the payments were made.

Other links:

-       Stress Tests Results to Be Released May 4 (Bloomberg)

-       Fed’s Balance Sheet Expands to $2.19 Trillion (WSJ)

-       Banks Balk at Selling Toxic Assets (Time)

-       Fed Looks Long Term for TALF (WSJ)

-       Financial Crisis Must Be Probed, Pelosi Says (WaPo)

-       Fannie, Freddie Face Pressure to Revamp as U.S. Aid Increases (Bloomberg)