GM has until Monday to complete a government-ordered restructuring that includes debt reduction, labor cost cuts and plant closures. But a Chapter 11 reorganization is likely after the company said its offer to exchange $27 billion in unsecured debt for 10 percent of the company's stock had failed. GM has received $19.4 billion in federal loans.

The move came as crosstown rival Chrysler LLC headed to court Wednesday to ask bankruptcy judge for permission to sell the bulk of its assets to a group headed by Italy's Fiat Group SpA in hopes of saving itself from liquidation. Attorneys for Chrysler maintain that the Fiat deal is the company's only hope to avoid being sold piece by piece, but car dealers, debtholders, former employees and others are protesting.

Chrysler filed for bankruptcy protection April 30, after the government ended talks with a group of holdout debtholders. Both automakers were pulled down by overwhelming debt, high pension, health care and other labor costs relative to competitors, a global auto sales slump and a dismal U.S. housing market that pulled down demand for pickup trucks, their top-selling vehicles.

News of the failed GM bond exchange offer sent its shares down 12 cents, or 8.3 percent, to $1.32 in morning trading.

John Pottow, a professor at the University of Michigan who specializes in bankruptcy, said GM evading Chapter 11 now is almost impossible.

The Federal Deposit Insurance Corp. said higher trading revenues at big banks helped the industry earn a $7.6 billion profit in the January-March period, compared with a record loss of $36.9 billion in the fourth quarter. The profit was 61 percent below the $19.3 billion earned in the year-ago period and followed the first quarterly loss in 18 years.

U.S. banks and thrifts set aside $60.9 billion in the first quarter to cover potential loan losses, up from $36.2 billion a year earlier.

The number of troubled banks jumped to 305, the highest number since 1994 during the savings and loan crisis, from 252 in the fourth quarter, according to the FDIC.

Thirty-six federally-insured institutions already have failed and been shut down by regulators this year, extending a wave of collapses that began in 2008. This year's tally compares with 25 in all of 2008 and three in 2007.

The failures sliced the amount in the deposit insurance fund to $13 billion in the first quarter, the lowest level since 1993. That compares with $17.3 billion a year earlier.

"Troubled loans continue to accumulate" and the costs to banks from soured loans "are weighing heavily on the industry's performance," FDIC Chairman Sheila Bair said. "Nevertheless, compared to a year ago, we see some positives."

The decision from the Court of Appeals in Washington upholds a Federal Communications Commission ruling that banned the exclusive agreements as anticompetitive.

The deals involved a provider exchanging a valuable service like wiring a multiunit building for cable in exchange for the exclusive right to provide service to all the residents.

The commission said cable operators could no longer enter into such deals and existing ones could not be enforced.

The National Cable & Telecommunications Association and a pair of affiliated real estate groups sued, saying the FCC did not justify the change in policy, consider the retroactive effects or have the authority to regulate the deals. But the appeals court sided with the FCC and said it acted well within the bounds of the law.

A spokesman for the cable association had no immediate comment on the ruling.

Seconds after Obama named U.S. Appeals Court Judge Sonia Sotomayor as his choice to replace retiring Associate Justice David Souter, Senate Minority Leader Mitch McConnell, R-Ky., said Republicans would treat the nominee fairly, but would closely examine her record.

"We will thoroughly examine her record to ensure she understands that the role of a jurist in our democracy is to apply the law even-handedly, despite their own feelings or personal or political preferences," McConnell said.

Sen. Jon Kyl, R-Ariz., the number two ranking Senate Republican quickly followed saying the nominee should be "neither pre-confirmed nor prejudged."

Sen. Richard Shelby, R-Ala., said he looked forward to ensuring that Sotomayor "has the qualifications and temperament necessary" to be the next Supreme Court justice.

Shelby doesn't sit on the Senate Judiciary Committee which will hold the confirmation hearings, but the entire Senate must vote Sotomayor's confirmation.

Sen. Olympia Snowe, R-Maine, a moderate Republican congratulated Obama for "nominating a well qualified woman."

In his announcement, Obama said he hoped Sotomayor would be on the bench by the time the Court's fall term begins.

Senate Republicans are going to have a difficult time attempting to block Sotomayor's nomination to the High Court.

The Democrats control 59 seats in the Senate, and this could increase to a 60-seat supermajority by the time a confirmation vote occurs if Al Franken ultimately defeats Sen. Norm Coleman, R-Minn., in that state's still-contested Senate race.

Sen. Arlen Specter changed parties this spring, leaving the Republicans for the Democratic majority, giving them their 59th seat. He had been the senior Republican on the Senate Judiciary Committee and would have led the GOP scrutiny of Sotomayor.

Tuesday, he said he "applauded" Obama's choice.

"Her confirmation would add needed diversity in two ways: the first Hispanic and the third woman to serve on the high court," Specter said.

The fact that Sotomayor is the first Hispanic to be nominated to the Supreme Court would make any challenge to her being confirmed politically difficult for Republicans.

Given the increasingly large proportion of the voting electorate that Hispanic Americans account for, it would be difficult for the GOP to oppose her selection.

In November's presidential election, Obama made double-digit gains among Hispanic voters compared to Sen. John Kerry, D-Mass., in the 2004 election.

That didn't stop conservative groups from quickly noting their opposition to Sotomayor's nomination.

"Judge Sotomayor is a liberal judicial activist of the first order who thinks her own personal political agenda is more important that the law as written," said Wendy E. Long, counsel to the Judicial Confirmation Network, a coalition of conservative groups.

Hispanic groups on the other hand greeted Sotomayor's nomination warmly.

"Judge Sotomayor is an outstanding nominee with three decades of judicial experience who will be a brilliant Supreme Court justice who serves the nation well," the League of United Latin American Citizens said in a statement.

The high court agreed Tuesday to review Merck's challenge to a federal appeals court's reinstatement of a class-action securities lawsuit.

Investors had charged Merck with providing misleading information or omitting information about the risks of Vioxx. A U.S. District judge dismissed the November 2003 lawsuit, ruling that all the plaintiffs' claims were time-barred under the statute of limitation.

But the 3rd U.S. Circuit Court of Appeals decided to allow the lawsuits and Merck appealed to the Supreme Court.

Vioxx was pulled from the market Sept. 30, 2004, because it doubled risks of heart attack, stroke and death. That day alone, stockholders lost a collective $28 billion.

The justices without comment Tuesday left in place a ruling by the Tennessee Court upholding the damages against Chrysler LLC.

The lawsuit claimed 8-month-old Joshua Flax was riding in the back seat of a 1998 Dodge Caravan in Nashville, Tenn., in 2001 when the vehicle was rear-ended, causing the front passenger seat to collapse and the passenger to strike him, fracturing his skull.

A jury initially awarded Flax's parents $98 million in punitive damages in 2004, but the damages were later reduced. The family was also awarded $5 million in compensatory damages, which were upheld by an appeals court.

The third-largest U.S. automaker filed for bankruptcy protection in April.

Christian Karl Gerhartsreiter (GAYR'-hahrtz-ry-tur) is accused of kidnapping his 7-year-old daughter during a supervised visit in Boston last July. He and the girl were found six days later in Baltimore.

Gerhartsreiter also is charged with providing a false name to police. His lawyers had argued it would be unfair for jurors to hear him called Gerhartsreiter, because he has not been convicted of providing the false name.

Superior Court Judge Frank Gaziano said Tuesday he would call him Gerhartsreiter to introduce the case, then refer to him as "the defendant" during the trial.

Jury selection is to begin Tuesday.