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  • Could the Fed raise rates again in June? | CNN Business

    Could the Fed raise rates again in June? | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    Will the Federal Reserve hike interest rates at its next meeting in June — for the 11th time in a row — or pause? Wall Street seems to be betting on the latter, but it was a topsy-turvy journey to that consensus last week.

    What happened: The Fed’s meeting earlier this month fueled hopes that it was done with rate hikes, at least for now. Then, a slate of economic data last week came in stronger than expected.

    Retail spending rebounded in April after two months of declines, suggesting that consumers are still spending despite tightening their purse strings. Jobless claims declined more than expected for the week ended May 13, staying below historical averages.

    Traders saw a roughly 36% chance last Thursday that the Fed will raise rates by another quarter point in June, up from around 15.5% on May 12, according to the CME FedWatch Tool.

    Then, Fed Chair Jerome Powell weighed in mid-morning Friday. In a panel with former Fed head Ben Bernanke, Powell said that uncertainty remains surrounding how much demand will decline from tighter credit conditions and the lagged effects of hiking rates. Traders pared down their expectations to about a 18.6% chance that the central bank will raise rates next month, as of Friday evening.

    Experts seem to agree that the Fed is unlikely to raise rates again in June. “The absence of any such preparation [for a raise] is the signal and gives us additional confidence that the Fed is not going to hike in June absent a very big surprise in the remaining data, though we should expect a hawkish pause,” Evercore ISI strategists said in a May 19 note.

    Jim Baird, chief investment officer at Plante Moran Financial Advisors, also expects the Fed to hold rates steady in June. But that decision isn’t set in stone, and the Fed will likely monitor three key factors in making its decision, he said. Those are:

    • The debt ceiling. President Joe Biden and congressional leaders have maintained that the US will likely not default on its debt. But if such a scenario were to happen, it could have catastrophic consequences for the economy and financial markets that would require the Fed wait for the crisis to be resolved before taking action.
    • Evolving financial conditions. The collapses of regional lenders Silicon Valley Bank, Signature Bank and First Republic have accelerated the tightening of credit conditions. While that has complicated the Fed’s plan to stabilize prices, it also could benefit the central bank by doing some of its work for it by slowing spending.
    • Delayed impact. The Fed’s interest rate hikes flow through the economy with a lag. So, it will take some months for the full effect of its aggressive tightening cycle to show up in the economy. That means the Fed could want to take a pause to monitor the continuing impact of what it has already done.

    The Fed has also maintained that its actions are data dependent, meaning it will keep close watch on economic data that comes in before it’s due to announce its next rate decision on June 14.

    Some key data points set for release before then include the April Personal Consumption Expenditures price index (that’s the Fed’s preferred inflation metric), May jobs report, the May Consumer Price Index and May Producer Price Index. (The latter two reports are due on the two days the Fed meets.)

    If these data points show considerable weakening in the labor market or continued declines in inflation, that helps make the case for a pause. But signs of a robust economy with little to no signs of slowing down could mean the Fed has more room to tighten — and that it could take that opportunity.

    Morgan Stanley chief executive James Gorman, 64, will step down from his role within the next 12 months, he said Friday at the bank’s annual meeting.

    “The specific timing of the CEO transition has not been determined, but it is the Board’s and my expectation that it will occur at some point in the next 12 months. That is the current expectation in the absence of a major change in the external environment,” Gorman said.

    Gorman, who is one of the longest-serving heads of a US bank and largely responsible for helping lead a sweeping transformation of the company after the 2008 financial crisis, became CEO in January 2010.

    He will assume the role of executive chairman for “a period of time,” Gorman said, adding that the board of directors has three senior internal candidates in the pipeline to potentially take over as the next chief executive.

    Read more here.

    The June 1 ‘X-date’ — the estimated point at which the US Treasury could run out of cash — is fast approaching. For JPMorgan Chase’s Jamie Dimon, another key date is already here.

    The chief executive told Bloomberg earlier this month that he has held a so-called “war room” weekly to prepare the bank for the possibility the United States defaults on its debt. He plans to meet more often as the X-date approaches, and then meet every day by May 21, he said, adding that the meetings will eventually ramp up to take place three times a day.

    “I don’t think [a default] is going to happen, because it gets catastrophic,” Dimon said. “The closer you get to it, you will have panic.”

    Debt ceiling negotiations appeared to be going in a positive direction for most of last week. Both President Joe Biden and House Speaker Kevin McCarthy said that the United States is unlikely to default on its debt and seemed optimistic about the path to a deal.

    But debt ceiling talks between the White House and McCarthy’s office have hit a snag, and negotiators put a pause on the talks, multiple sources told CNN Friday.

    While that doesn’t mean the negotiations are falling completely apart, or that the country is headed for a default, it does pose more challenges for the stock market, which has stayed relatively resilient despite debt ceiling worries starting to slowly creep in.

    Dimon said in the same Bloomberg interview that he’d “love to get rid of the debt ceiling thing” altogether.

    The debt ceiling situation “is very unfortunate,” he said. “It should never happen this way.”

    Monday: JPMorgan Chase investor day.

    Tuesday: April new home sales. Earnings from Lowe’s (LOW).

    Wednesday: May Fed meeting minutes.

    Thursday: GDP Q1 second read, April pending home sales, mortgage rates and weekly jobless claims. Earnings from Costco (COST), Dollar Tree (DLTR) and Best Buy (BBY).

    Friday: April Personal Consumption Expenditures and May University of Michigan final consumer sentiment reading.

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  • Indiana’s recycling plant fire is mostly out, but evacuations remain as crews monitor air quality and clear debris from schools and homes | CNN

    Indiana’s recycling plant fire is mostly out, but evacuations remain as crews monitor air quality and clear debris from schools and homes | CNN

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    CNN
     — 

    A fire burning at a recycling plant in Richmond, Indiana, is mostly out, but hundreds remain evacuated from their homes as crews monitor the air for chemicals and collect potentially harmful debris from neighboring schools and homes, officials said Saturday.

    Richmond residents who live within a half a mile radius of the recycling plant – about 2,000 of Richmond’s 35,000 residents – have been under a mandatory evacuation order since Tuesday, when the massive inferno exploded at the plastic-filled recycling plant in Richmond, sending thick, black smoke over the area.

    When they can return home will mainly depend on whether it’s safe to breathe the air in their community. Officials had warned that the smoke the fire spawned was “definitely toxic,” forcing the closure of Richmond public schools for days as the US Environmental Protection Agency performed air sampling and monitoring tests in the area.

    An announcement was initially expected Saturday on when evacuation orders could be lifted, but Richmond city officials later said that no determination had been made. “We have another meeting in the morning to determine the best time to lift the evacuation order,” Mayor Dave Snow said Saturday evening.

    “Unfortunately, we are unable to provide an exact time when evacuation orders will be lifted. As air monitoring results come back from lab testing and they can be analyzed by our health experts, we are hoping to be able to allow residents to return to their homes,” Wayne County Emergency Management Agency officials said Saturday.

    Those downwind from the fire were asked to continue to shelter in place “if they feel they are in danger or find themselves in a smoke plume,” emergency officials said.

    More meetings and data analysis are needed before the evacuation order can be lifted, Richmond Fire Chief Tim Brown told CNN Saturday.

    As for the blaze itself, Brown said firefighters have knocked down 98-99% of the fire at the recycling plant as of Saturday.

    “Right now, there is no plume, there is no product being off-gassed from the fire itself,” Brown told CNN. “What we have coming off of it is mainly a white smoke or some steam. We have no plume. We have a slight wind, which is kind of pushing things out.”

    Inside the facility, there are hot spots and occasional small fires that will continue to smolder for days and produce smoke, soot or the smell of burnt plastic, emergency officials said.

    In the meantime, work is underway to clear debris scattered in the community from the toxic fire.

    Some samples of debris from the area tested positive for asbestos containing materials, Wayne County emergency officials said, citing preliminary tests by the EPA.

    “Because all debris has the potential to contain asbestos, it is important that a trained professional remove all materials suspected to be from the fire,” emergency officials said, asking residents to not disturb or touch any debris they find on their property.

    Asbestos is a naturally occurring, but very toxic, substance that was once widely used for insulation. When inhaled or ingested, asbestos fibers can become trapped in the body, and may eventually cause genetic damage to the body’s cells. Exposure may also cause mesothelioma, a rare and aggressive form of cancer.

    Crews in protective gear began collecting debris from three schools near the fire site on Saturday, including three in Richmond and one school in Ohio.

    Officials said that schools impacted with debris will be cleared first, and then contractors will begin to deploy drones to search rooftops for additional debris, according to the post.

    “After school grounds are cleared, these contractors will begin removing debris from residential properties, parks and/or public areas, and businesses,” city officials say in the post.

    The county said the EPA is bringing in federal contractors to assist with the proper cleanup and removal of visible debris in both Indiana and Ohio.

    A primary health concern to residents is particulate matter, which could cause respiratory problems if inhaled, Christine Stinson, who heads the Wayne County Health Department, previously said.

    At the fire zone’s center, the chemicals hydrogen cyanide, benzene, chlorine, carbon monoxide and volatile organic compounds, or VOCs, were detected, the EPA said Friday. They were not detected outside the evacuation zone, the agency said.

    Potentially harmful VOCs also were found in six air samples, the agency said, without saying where the samples were taken.

    Particulate matter also was found inside and outside the half-mile evacuation zone, as expected, the agency said.

    Additionally, one of two air samples taken a little more than a mile from the fire site detected chrysotile asbestos in debris, an EPA official said Thursday. Also called white asbestos, chrysotile asbestos can cause cancer and is used in products from cement to plastics to textiles.

    As for water quality, testing downstream of the fire site is underway and officials say they have “not found anything of immediate alarm, including any sign of fish kills.”

    Crews did find some ash and loose plastic debris, “but weir booms have been installed and are successfully capturing this material. Likewise, Indiana American Water has also been closely monitoring the drinking water and has reported no unusual readings or results from testing,” Wayne County emergency officials said.

    The cause of the fire remains under investigation and likely won’t be known for weeks, officials said. But local leaders have shared concerns since at least 2019 that the facility had hazards and building code violations, records show.

    The mayor has accused the plant’s owner of ignoring a city order to clean up the property, saying the plant was a fire hazard.

    CNN has sought comment from the plant’s owner, Seth Smith. The attorney who previously represented Smith in a related lawsuit declined to comment.

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  • Silicon Valley Bank collapse renews calls to address disparities impacting entrepreneurs of color | CNN Business

    Silicon Valley Bank collapse renews calls to address disparities impacting entrepreneurs of color | CNN Business

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    CNN
     — 

    When customers at Silicon Valley Bank rushed to withdraw billions of dollars last month, venture capitalist Arlan Hamilton stepped in to help some of the founders of color who panicked about losing access to payroll funds.

    As a Black woman with nearly 10 years of business experience, Hamilton knew the options for those startup founders were limited.

    SVB had a reputation for servicing people from underrepresented communities like hers. Its failure has reignited concerns from industry experts about lending discrimination in the banking industry and the resulting disparities in capital for people of color.

    Hamilton, the 43-year-old founder and managing partner of Backstage Capital, said that when it comes to entrepreneurs of color, “we’re already in the smaller house. We already have the rickety door and the thinner walls. And so, when a tornado comes by, we’re going to get hit harder.”

    Established in 1983, the midsize California tech lender was America’s 16th largest bank at the end of 2022 before it collapsed on March 10. SVB provided banking services to nearly half of all venture-backed technology and life-sciences companies in the United States.

    Hamilton, industry experts and other investors told CNN the bank was committed to fostering a community of minority entrepreneurs and provided them with both social and financial capital.

    SVB regularly sponsored conferences and networking events for minority entrepreneurs, said Hamilton, and it was well known for funding the annual State of Black Venture Report spearheaded by BLK VC, a nonprofit organization that connects and empowers Black investors.

    “When other banks were saying no, SVB would say yes,” said Joynicole Martinez, a 25-year entrepreneur and chief advancement and innovation officer for Rising Tide Capital, a nonprofit organization founded in 2004 to connect entrepreneurs with investors and mentors.

    Martinez is also an official member of the Forbes Coaches Council, an invitation-only organization for business and career coaches. She said SVB was an invaluable resource for entrepreneurs of color and offered their clients discounted tech tools and research funding.

    Minority business owners have long faced challenges accessing capital due to discriminatory lending practices, experts say. Data from the Small Business Credit Survey, a collaboration of all 12 Federal Reserve banks, shows disparities on denial rates for bank and nonbank loans.

    In 2021, about 16% of Black-led companies acquired the total amount of business financing they sought from banks, compared to 35% of White-owned companies, the survey shows.

    “We know there’s historic, systemic, and just blatant racism that’s inherent in lending and banking. We have to start there and not tip-toe around it,” Martinez told CNN.

    Asya Bradley is an immigrant founder of multiple tech companies like Kinley, a financial services business aiming to help Black Americans build generational wealth. Following SVB’s collapse, Bradley said she joined a WhatsApp group of more than 1,000 immigrant business founders. Members of the group quickly mobilized to support one another, she said.

    Immigrant founders often don’t have Social Security numbers nor permanent addresses in the United States, Bradley said, and it was crucial to brainstorm different ways to find funding in a system that doesn’t recognize them.

    “The community was really special because a lot of these folks then were sharing different things that they had done to achieve success in terms of getting accounts in different places. They also were able to share different regional banks that have stood up and been like, ‘Hey, if you have accounts at SVB, we can help you guys,’” Bradley said.

    Many women, people of color and immigrants opt for community or regional banks like SVB, Bradley says, because they are often rejected from the “top four banks” — JPMorgan Chase, Bank of America, Wells Fargo and Citibank.

    In her case, Bradley said her gender might have been an issue when she could only open a business account at one of the “top four banks” when her brother co-signed for her.

    “The top four don’t want our business. The top four are rejecting us consistently. The top four do not give us the service that we deserve. And that’s why we’ve gone to community banks and regional banks such as SVB,” Bradley said.

    None of the top four banks provided a comment to CNN. The Financial Services Forum, an organization representing the eight largest financial institutions in the United States has said the banks have committed millions of dollars since 2020 to address economic and racial inequality.

    Last week, JPMorgan Chase CEO Jamie Dimon told CNN’s Poppy Harlow that his bank has 30% of its branches in lower-income neighborhoods as part of a $30 billion commitment to Black and Brown communities across the country.

    Wells Fargo specifically pointed to its 2022 Diversity, Equity, and Inclusion report, which discusses the bank’s recent initiatives to reach underserved communities.

    The bank partnered last year with the Black Economic Alliance to initiate the Black Entrepreneur Fund — a $50 million seed, startup, and early-stage capital fund for businesses founded or led by Black and African American entrepreneurs. And since May 2021, Wells Fargo has invested in 13 Minority Depository Institutions, fulfilling its $50 million pledge to support Black-owned banks.

    Black-owned banks work to close the lending gap and foster economic empowerment in these traditionally excluded communities, but their numbers have been dwindling over the years, and they have far fewer assets at their disposal than the top banks.

    OneUnited Bank, the largest Black-owned bank in the United States, manages a little over $650 million in assets. By comparison, JPMorgan Chase manages $3.7 trillion in assets.

    Because of these disparities, entrepreneurs also seek funding from venture capitalists. In the early 2010s, Hamilton intended to start her own tech company — but as she searched for investors, she saw that White men control nearly all venture capital dollars. That experience led her to establish Backstage Capital, a venture capital fund that invests in new companies led by underrepresented founders.

    “I said, ‘Well, instead of trying to raise money for one company, let me try to raise for a venture fund that will invest in underrepresented — and now we call them underestimated — founders who are women, people of color, and LGBTQ specifically,’ because I am all three,” Hamilton told CNN.

    Since then, Backstage Capital has amassed a portfolio of nearly 150 different companies and has made over 120 diversity investments, according to data from Crunchbase.

    But Bradley, who is also an ‘angel investor’ of minority-owned businesses, said she remains “really hopeful” that community banks, regional banks and fintechs “will all stand up and say, ‘Hey, we are not going to let the good work of SVB go to waste.’”

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  • UBS brings back Sergio Ermotti as CEO to oversee Credit Suisse rescue | CNN Business

    UBS brings back Sergio Ermotti as CEO to oversee Credit Suisse rescue | CNN Business

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    Hong Kong/London
    CNN
     — 

    UBS is bringing back its former chief executive, Sergio Ermotti, to manage the hugely complex and risky task of completing the bank’s emergency takeover of rival Credit Suisse

    (CS)    .

    The surprise appointment, announced Wednesday, highlights the scale of the challenge facing the Swiss lender as it executes a first-of-its-kind merger of two global banks with combined assets of nearly $1.7 trillion.

    The Swiss government engineered the rescue 10 days ago as Credit Suisse teetered on the brink of collapse, a failure that would have rocked a global financial system already reeling from the second-biggest American banking collapse in history.

    Ermotti was UBS

    (UBS)     CEO between 2011 and 2020 and is credited with successfully overhauling the bank following its bailout during the 2008 financial crisis. He is seen as a safe pair of hands capable of turning around embattled Credit Suisse.

    His second stint in the top job, which begins April 5, means the end of current CEO Ralph Hamers’ tenure after just two and a half years in the role, during which time the bank has delivered successive record results.

    Hamers “has agreed to step down to serve the interests of the new combination, the Swiss financial sector and the country,” UBS said in a statement. Hamers will remain at the lender for a transition period.

    UBS chairman Colm Kelleher thanked Hamers for his contribution but said the board felt Ermotti was “the better horse” for such a massive integration. “There’s a huge amount of risk in integrating these businesses,” Kelleher said at a press conference.

    As a first order of business, Ermotti will need to cut thousands of jobs and downsize Credit Suisse’s investment bank, while aligning it with a more conservative risk culture — a task he is familiar with.

    During his previous tenure as CEO, Ermotti “transformed” UBS’ investment bank “by cutting its footprint and achieved a profound culture change within the bank which allowed it to regain the trust of clients and other stakeholders, while restoring people’s pride in working for UBS,” the lender said in its statement.

    Kelleher and Hamers both highlighted the cultural differences with Credit Suisse. UBS’ smaller rival has been plagued by scandals and compliance failures in recent years that wiped out its profit and cost several top managers their jobs.

    In a fresh blow to Credit Suisse’s reputation, a US Senate investigation published Wednesday found that the bank is complicit in ongoing tax evasion by ultra-wealthy Americans.

    “We do not want to import a bad culture into UBS,” Kelleher told reporters, adding that UBS would put all Credit Suisse employees “through a culture filter, to make sure we don’t import something into our ecosystem that causes culture issues.”

    Hamers said integrating the banks is something he would have “loved to do,” but that he supported the board’s decision, which was in the best interests of the new entity and its stakeholders — including Switzerland and its financial sector.

    The merger is high-stakes for Switzerland’s economy, too. The combined bank’s assets are worth twice as much as the country’s annual output, while local deposits in the new entity equal 45% of GDP — an enormous amount even for a nation with healthy public finances and low levels of debt.

    In the Wednesday statement, Kelleher said the deal “imposes new priorities on us,” while supporting UBS’ existing strategy.

    He added: “With his unique experience, I am very confident that Sergio [Ermotti] will deliver the successful integration that is so essential for both banks’ clients, employees and investors, and for Switzerland.”

    Ermotti told reporters he felt a “call of duty” to accept the role and that during his previous stint as CEO he had believed that an acquisition of this kind was the “right next move for UBS.”

    “I always felt that the next chapter I wanted to write back then was a chapter of doing a transaction like this one.”

    Ermotti is currently chairman of Swiss Re

    (SSREF)     and intends to step down after the insurer’s annual general meeting next month.

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  • The company behind Johnnie Walker and Guinness appoints first female CEO | CNN Business

    The company behind Johnnie Walker and Guinness appoints first female CEO | CNN Business

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    London
    CNN
     — 

    One of the world’s largest alcoholic drinks companies has appointed its first female CEO.

    Diageo, which makes Guinness beer and Johnnie Walker whisky, said Tuesday that chief operating officer Debra Crew would succeed Ivan Menezes, who will retire from the company after 10 years at the helm.

    Crew is to take over on July 1, the company said in a statement. Her appointment means women will make up more than 50% of Diageo’s executive committee, it added.

    Diageo is the seventh-largest member of the FTSE 100

    (UKX)     index and will now become the largest UK-listed company led by a woman. There are just nine other FTSE 100

    (UKX)     companies led by women, including pharmaceutical company GlaxoSmithKline

    (GLAXF)     and bank NatWest.

    Diageo is the world’s fourth biggest alcoholic drinks company by market value, after AB InBev

    (BUD)     and China’s Wuliangye Yibin and Kweichow Moutai. It is fifth biggest if French luxury goods group LVMH

    (LVMHF)    , which sells Moët champagne and Hennessy cognac, is included.

    Menezes is stepping down following a very successful tenure at Diageo, during which the company’s share price has almost doubled. It sells more Scotch whisky, tequila, vodka and gin by net sales value than any other business in the world.

    “Ivan has transformed Diageo’s global footprint, brand portfolio and strategic focus, positioning our business as a clear leader in premium drinks,” chairman Javier Ferrán said in the statement.

    “The Board has diligently planned for Ivan’s successor, and we are delighted to have appointed a leader of Debra’s calibre to the role,” he added. “I have no doubt that Diageo is in the right hands for the next phase of its growth.”

    Crew joined Diageo in 2020 from Pepsi

    (PEP)    Co. She is the former CEO of tobacco company Reynolds American and has worked at Kraft Foods, Nestle

    (NSRGF)     and Mars.

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  • Tom Brady buys partial stake in WNBA’s Las Vegas Aces | CNN

    Tom Brady buys partial stake in WNBA’s Las Vegas Aces | CNN

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    CNN
     — 

    Seven-time Super Bowl champion Tom Brady has acquired an ownership stake in the WNBA’s Las Vegas Aces, team owner Mark Davis announced Thursday.

    “I am very excited to be part of the Las Vegas Aces organization,” said Brady in a statement on Thursday. “I have always been a huge fan of women’s sports, and I admire the work that the Aces’ players, staff, and the WNBA continue to do to grow the sport and empower future generations of athletes. To be able to contribute in any way to that mission as a member of the Aces organization is an incredible honor.”

    Brady said his love for women’s sports grew out of watching his older sisters, who were “by far the best athletes in our house!”

    Brady announced his retirement from the NFL in February after 23 seasons with the New England Patriots and Tampa Bay Buccaneers. During his long career, the three-time league MVP set almost every passing record, including regular season passing yards (89,214) and passing touchdowns (649). He has also amassed the most wins of any player in NFL history (251).

    “Since I purchased the Aces, our goal has been to win on and off the court,” said Davis, who also owns the NFL’s Las Vegas Raiders. “Tom Brady is a win not only for the Aces, and the WNBA, but for women’s professional sports as a whole.”

    Davis purchased the WNBA franchise before the 2021 season. Brady’s partial acquisition of the team is subject to WNBA approval.

    The Aces enter the upcoming season as reigning WNBA champions. The team opens the season against the Seattle Storm on May 20 at Climate Pledge Arena in Washington.

    In October, Brady joined the ownership group of an expansion Major League Pickleball team, along with former tennis World No. 1 Kim Clijsters, who in December attended the draft to support their new squad, the Las Vegas Night Owls.

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  • TikTok CEO testifies before Congress for the first time | CNN Business

    TikTok CEO testifies before Congress for the first time | CNN Business

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    CNN
     — 

    TikTok CEO Shou Chew made his first appearance before Congress on Thursday and was immediately hit by intense criticism from lawmakers, including calls for the app to be banned.

    Rep. Cathy McMorris Rodgers, the chair of the House Energy and Commerce Committee, opened Thursday’s hearing by tearing into TikTok, and telling Shou: “Your platform should be banned.”

    “I expect today you’ll say anything to avoid this outcome,” she continued. “We aren’t buying it. In fact, when you celebrate the 150 million American users on TikTok, it emphasizes the urgency for Congress to act. That is 150 million Americans that the [Chinese Communist Party] can collect sensitive information on.”

    In his opening remarks, Chew attempted to stress TikTok’s independence from China and played up its US ties. “TikTok itself is not available in mainland China, we’re headquarterd in Los Angeles and Singapore, and we have 7,000 employees in the U.S. today,” he said.

    “Still, we have heard important concerns about the potential for unwanted foreign access to US data and potential manipulation of the TikTok US ecosystem,” Chew said. “Our approach has never been to dismiss or trivialize any of these concerns. We have addressed them with real action.

    Chew’s moment in the hot seat comes as some lawmakers are renewing calls for the app to be banned in the United States due to perceived national security concerns because of its ties to China through its parent company, ByteDance. TikTok acknowledged to CNN last week that federal officials are demanding the app’s Chinese owners sell their stake in the social media platform, or risk facing a US ban of the app. A number of countries, including the US, have already instituted a ban of the app on government devices due to the security concerns.

    TikTok doesn’t operate in China. But since the Chinese government enjoys significant leverage over businesses under its jurisdiction, the theory goes that ByteDance, and thus indirectly, TikTok, could be forced to cooperate with a broad range of security activities, including possibly the transfer of TikTok data.

    With his appearance, Chew may hope to reassure Americans and temper the heated rhetoric in Washington about the app – but the first two hours of the hearing showed just how challenging a task that might be.

    Much of Chew’s attempts to stress that his company is not an arm of the Chinese government appeared to fall on deaf ears. Numerous members of Congress interrupted the chief executive’s testimony to say they simply don’t believe him.

    “To the American people watching today, hear this: TikTok is a weapon by the Chinese Communist Party to spy on you, manipulate what you see and exploit for future generations,” said Rep. McMorris Rodgers.

    In an exchange with Rep. Anna Eshoo, Chew talked up TikTok’s ongoing efforts to protect US user data and said he has “seen no evidence that the Chinese government has access to that data; they have never asked us, we have not provided it.”

    “I find that actually preposterous,” Eshoo fired back.

    “I have looked in — and I have seen no evidence of this happening,” Chew responded. “Our commitment is to move their data into the United States, to be stored on American soil by an American company, overseen by American personnel. So the risk would be similar to any government going to an American company, asking for data.”

    “I don’t believe that TikTok — that you have said or done anything to convince us,” Eshoo said.

    Perhaps no exchange sums up Thursday’s hearing like a moment following Rep. Kat Cammack’s lengthy critique of TikTok’s content moderation and links to China.

    “Can I respond, Chair?” Chew asked McMorris Rodgers after Cammack’s time was up.

    McMorris Rodgers considered Chew for a brief moment.

    “No. We’re going to move on,” she said.

    As lawmakers doubled down on their questions about TikTok’s data collection practices, Chew also emphasized that the data TikTok collects is data “that’s frequently collected by many other companies in our industry.”

    “We are committed to be very transparent with our users about what we collect,” Chew said. “I don’t believe what we collect is more than most players in the industry.”

    Independent researchers have backed Chew’s assertions. In 2020, The Washington Post worked with a privacy researcher to look under the hood at TikTok, concluding that the app does not appear to collect any more data than your typical mainstream social network. The following year, Pellaeon Lin, a Taiwan-based researcher at the University of Toronto’s Citizen Lab, performed another technical analysis that reached similar conclusions.

    Still, even if TikTok collects about the same amount of information as Facebook or Twitter, that’s still quite a lot of data, including information about the videos you watch, comments you write, private messages you send, and — if you agree to grant this level of access — your exact geolocation and contact lists.

    While national security was expected to be the primary focus of the hearing, multiple lawmakers also highlighted concerns about TikTok’s impact on children.

    Democratic ranking member of the committee Rep. Frank Pallone, for example, said Thursday: “Research has found that TikTok’s algorithms recommend videos to teens that create and exacerbate feelings of emotional distress, including videos promoting suicide, self-harm and eating disorders.”

    Rep. Bob Latta, a Republican from Ohio, accused TikTok of promoting a video on the so-called “blackout challenge” or choking challenge to the feed of a 10-year-old girl from Pennsylvania, who later died after trying to mimic the challenge in the video.

    Republican Rep. Gus Bilirakis of Florida also said there is a lack of adequate content moderation, which leaves room for kids to be exposed to content that promotes self harm.

    “Your technology is literally leading to death,” Bilirakis said to TikTok CEO Shou Chew.

    Citing examples of harmful content served to children, he said, “it is unacceptable, sir, that even after knowing all these dangers, you still claim that TikTok is something grand to behold.”

    TikTok, for its parts, has launched a number of features in recent months to provide additional safeguards for younger users, including setting a new 60-minute default for daily time limit for those under the age of 18. Even that feature, however, was criticized by lawmakers as being too easy for teens to bypass.

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  • Jamie Dimon and other big bank CEOs met with top Biden economist Lael Brainard | CNN Business

    Jamie Dimon and other big bank CEOs met with top Biden economist Lael Brainard | CNN Business

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    CNN
     — 

    Lael Brainard, President Joe Biden’s top economic adviser, met with JPMorgan Chase CEO Jamie Dimon and other leading Wall Street CEOs on Wednesday, people familiar with the matter told CNN.

    The meeting comes as the banking industry remains in turmoil following the biggest bank failures since 2008.

    Brainard, the director of the White House National Economic Council, met with Dimon and other big bank CEOs at a Washington event held by the Financial Services Forum, the sources told CNN.

    Beyond Dimon, it’s not clear specifically which CEOs met with Brainard but the Financial Services Forum represents the leaders of eight of America’s biggest banks. Its members include Citigroup CEO Jane Fraser, Bank of America CEO Brian Moynihan and Goldman Sachs CEO David Solomon.

    It’s not known specifically what Brainard and the bank executives discussed, but US officials and regulators have stayed in close contact with bank industry leaders in the wake of deposit runs that collapsed Silicon Valley Bank and Signature Bank earlier this month.

    Brainard, who recently moved to the White House from the Federal Reserve, met with Dimon and the other bank CEOs as part of a series of meetings held over the past month with business, labor, advocacy and academic leaders, one of the sources told CNN.

    Representatives for both JPMorgan and the White House declined to comment.

    News of Dimon’s scheduled meeting with Brainard, the former No. 2 official at the Federal Reserve, was previously reported by Reuters.

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  • Silicon Valley Bank left a void that won’t easily be filled | CNN Business

    Silicon Valley Bank left a void that won’t easily be filled | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    It’s difficult to overstate the influence that Silicon Valley Bank had over the startup world and the ripple effect its collapse this month had on the global tech sector and banking system.

    While SVB was largely known as a regional bank to those outside of the tight-knit venture capital sphere, within certain circles it had become an integral part of the community – a bank that managed the idiosyncrasies of the tech world and helped pave the way for the Silicon Valley-based boom that has consumed much of the economy over the past three decades.

    SVB’s collapse was the largest bank failure since the 2008 financial crisis: It was the 16th largest bank in the country, holding about $342 billion in client funds and $74 billion in loans.

    At the time of its collapse, about half of all US venture-backed technology and life science firms were banking with SVB. In total, it was the bank for about 2,500 venture firms including Andreessen Horowitz, Sequoia Capital, Bain Capital and Insight Partners.

    But the influence of SVB went beyond lending and banking – former CEO Gregory Becker sat on the boards of numerous tech advocacy groups in the Bay Area. He chaired the TechNet trade association and the Silicon Valley Leadership Group, was a director of the Federal Reserve Bank of San Francisco and served on the United States Department of Commerce’s Digital Economy Board of Advisors.

    There’s no doubt that the failure of Silicon Valley Bank left a large void in tech. The question is how that gap will be filled.

    To find out, Before the Bell spoke with Ahmad Thomas, president and CEO of the Silicon Valley Leadership Group. The influential advocacy group is working to convene its hundreds of member companies – including Amazon, Bank of America, BlackRock, Google, Microsoft and Meta – to discuss what happens next.

    This interview has been edited for length and clarity.

    Before the Bell: What’s the feeling on the ground with tech and VC leadership in Silicon Valley?

    Ahmad Thomas: Silicon Valley Bank has been a key part of our fabric here for four decades. SVB was truly a pillar of the community and the innovation economy. The absence of SVB – that void – and coalescing leaders to fill that void is where my energy is focused and that is not a small task.

    I would say there was a fairly high level of unease a few days ago, and I believe the swift steps taken by leaders in Washington have helped quell a fair amount of that unease, but looking at Credit Suisse and First Republic just over the last couple of days, clearly we are in a situation that is going to continue to develop in the weeks and months ahead.

    So how do you fill it?

    We’re working to be a voice around stability, particularly about the fundamentals of the innovation economy. We can acknowledge the void given the absence of Silicon Valley Bank, but I do think we need voices out there to be very clear in highlighting that the fundamentals and the innovation infrastructure remains robust here in Silicon Valley.

    This is a moment where I think people need to take a step back, let cooler heads prevail, and understand that there are opportunities both from an investment standpoint, a community engagement standpoint and corporate citizenship standpoint for new leaders in Silicon Valley to step up.

    Are you working to advocate for more permanent regulation in DC?

    It’s far too early for that. But if there are opportunities to enhance access to capital to entrepreneurs to founders of color or in marginalized communities and if there are opportunities to try and drive innovation and economic growth, we will always be at the table for those conversations.

    Do you have any ideas about how long this crisis will continue for? What’s your outlook?

    The problem is twofold: A crisis of confidence and the set of economic conditions on the ground. The economic conditions remain volatile for a variety of reasons: The softening economy, inflationary pressures and the interest rate environment. But I think right now we need to focus on stabilizing confidence in the investor community, in our business executive community and in the broader set of stakeholders around the strength of the innovation economy. That is something we need to shore up near term.

    From CNN’s Mark Thompson

    Switzerland’s biggest bank, UBS, has agreed to buy its ailing rival Credit Suisse (CS) in an emergency rescue deal aimed at stemming financial market panic unleashed by the failure of two American banks earlier this month.

    “UBS today announced the takeover of Credit Suisse,” the Swiss National Bank said in a statement. It said the rescue would “secure financial stability and protect the Swiss economy.”

    UBS is paying 3 billion Swiss francs ($3.25 billion) for Credit Suisse, about 60% less than the bank was worth when markets closed on Friday. Credit Suisse shareholders will be largely wiped out, receiving the equivalent of just 0.76 Swiss francs in UBS shares for stock that was worth 1.86 Swiss francs on Friday.

    Extraordinarily, the deal will not need the approval of shareholders after the Swiss government agreed to change the law to remove any uncertainty about the deal.

    Credit Suisse had been losing the trust of investors and customers for years. In 2022, it recorded its worst loss since the global financial crisis. But confidence collapsed last week after it acknowledged “material weakness” in its bookkeeping and as the demise of Silicon Valley Bank and Signature Bank spread fear about weaker institutions at a time when soaring interest rates have undermined the value of some financial assets.

    Read more here.

    From CNN’s David Goldman

    A week after Signature Bank failed, the Federal Deposit Insurance Corporation said it has sold most of its deposits to Flagstar Bank, a subsidiary of New York Community Bank.

    On Monday, Signature Bank’s 40 branches will begin operating as Flagstar Bank. Signature customers won’t need to make any changes to do their banking Monday.

    New York Community Bank bought substantially all of Signature’s deposits and a total of $38.4 billion worth of the company’s assets. That includes $12.9 billion of Signature’s loans, which New York Community Bank purchased at a steep discount -— it paid just $2.7 billion for them. New York Community Bank also paid the FDIC stock that could be worth up to $300 million.

    At the end of last year, Signature had more than $110 billion worth of assets, including $88.6 billion of deposits, showing how the run against the bank two weeks ago led to a massive decline in deposits.

    Not included in the transaction is about $60 billion in other assets, which will remain in the FDIC’s receivership. It also doesn’t include $4 billion in deposits from Signature’s digital bank business.

    Read more here.

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  • FDIC sells most of failed Signature Bank to Flagstar | CNN Business

    FDIC sells most of failed Signature Bank to Flagstar | CNN Business

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    New York
    CNN
     — 

    A week after Signature Bank failed, the Federal Deposit Insurance Corporation said it has sold most of its deposits to Flagstar Bank, a subsidiary of New York Community Bank.

    On Monday, Signature Bank’s 40 branches will begin operating as Flagstar Bank. Signature customers won’t need to make any changes to do their banking Monday.

    New York Community Bank bought substantially all of Signature’s deposits and a total of $38.4 billion worth of the company’s assets. That includes $12.9 billion of Signature’s loans, which New York Community Bank purchased at a steep discount -— it paid just $2.7 billion for them. New York Community Bank also paid the FDIC stock that could be worth up to $300 million.

    At the end of last year, Signature had more than $110 billion worth of assets, including $88.6 billion of deposits, showing how the run against the bank two weeks ago led to a massive decline in deposits.

    Not included in the transaction is about $60 billion in other assets, which will remain in the FDIC’s receivership. It also doesn’t include $4 billion in deposits from Signature’s digital bank business.

    As the banking crisis spreads, banks have grown increasingly wary of taking on risk. That’s likely why New York Community Bank was unwilling to take on all Signature’s assets.

    “We are unsurprised the FDIC retained loans as we would expect banks to be cautious on quickly buying loans without liability and loss protections,” said Jaret Seiberg, analyst at TD Cowan. “More broadly, we see it as positive for consumer confidence for the branches to be opening Monday as NYCB branches.”

    The FDIC said Sunday it expects to sell off those assets over time, and the total cost to the government will ultimately be about $2.5 billion.

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  • SVB collapse was driven by ‘the first Twitter-fueled bank run’ | CNN Business

    SVB collapse was driven by ‘the first Twitter-fueled bank run’ | CNN Business

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    New York
    CNN
     — 

    The massive amount of customer withdrawals that led to the collapse of Silicon Valley Bank had all the hallmarks of an old-fashioned bank run, but with a new twist befitting the primary industry the bank served: much of it unfolded online.

    Customers withdrew $42 billion in a single day last week from Silicon Valley Bank, leaving the bank with $1 billion in negative cash balance, the company said in a regulatory filing. The staggering withdrawals unfolded at a speed enabled by digital banking and were likely fueled in part by viral panic spreading on social media platforms and, reportedly, in private chat groups.

    In the day leading up to the bank’s collapse, multiple prominent venture capitalists took to Twitter in particular, and used their large platforms to raise alarms about the situation, sometimes typing in all caps. Some investors urged startups to rethink where they kept their cash. Founders and CEOs then shared tweets about the concerning situation at the bank in private Slack channels, according to The Wall Street Journal.

    On the other side of a screen, startup leaders raced to withdraw funds online – so many, in fact, that some told CNN the online system appeared to go down. Still, the end result was a modern race to withdraw funds, which House Financial Services Chair Patrick McHenry later described in a statement as ” the first Twitter-fueled bank run.”

    “Even back in the ancient days, way before we had any form of modern communication, this stuff tended to be rumors that moved really fast. The reason it would happen is people would walk down the street and observe people standing outside of banks,” Andrew Metrick, Janet L. Yellen Professor of Finance and Management at the Yale School of Management, told CNN. “Now we don’t have that, but we have Twitter.”

    The experience of the bank run was also far removed from prior eras when a large number of customers would physically show up at a bank to withdraw funds (though some did line up outside Silicon Valley Bank locations, too.) Now, many could do so online or through mobile devices.

    “What made the Silicon Valley Bank run unique was (1) the ease with which its customers could execute withdrawals and (2) the speed with which news of Silicon Valley Bank’s impending demise spread,” Ben Thompson, an analyst who tracks the tech industry, wrote in a post on Monday. “It was the speed, fueled by zero distribution costs for both rumors and withdrawals, that was so destabilizing.”

    Silicon Valley Bank was arguably uniquely susceptible to those factors given its tech-focused customer base. Moreover, its clients, many of whom were venture-backed businesses, were far more likely than the average consumer to keep more than the standard maximum FDIC insured amount of $250,000 in their accounts.

    “The FDIC covers 250K, but am I going to recover my whole 8 figures?” one startup founder told CNN last week, after the bank had collapsed. Other large tech companies kept even larger sums with the bank. That likely made the bank’s customers even more susceptible to the panic spreading online.

    Some prominent tech figures, including Mark Suster, a partner at venture capital firm Upfront Ventures, urged those in the VC community to “speak out publicly to quell the panic” around Silicon Valley Bank last week and cautioned against creating “mass hysteria.”

    “Classic ‘runs on the bank’ hurt our entire system,” he wrote in a lengthy Twitter thread on Thursday. “People are making public jokes about this. It’s not a joke, this is serious stuff. Please treat it as such.”

    His calls for calm weren’t enough. The next day, the US Federal Deposit Insurance Corporation stepped in and took control of the bank, which only added to the viral panic on Twitter.

    “YOU SHOULD BE ABSOLUTELY TERRIFIED RIGHT NOW,” Jason Calacanis, a tech investor, wrote on Twitter Sunday. “THAT IS THE PROPER REACTION.”

    Hours later, the Biden administration stepped in and guaranteed the bank’s customers would have access to all their money starting Monday.

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  • The tech industry avoided an ‘extinction-level event,’ but it’s not unscathed | CNN Business

    The tech industry avoided an ‘extinction-level event,’ but it’s not unscathed | CNN Business

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    CNN
     — 

    For much of the weekend, Silicon Valley scrambled to find a way through what one prominent tech investor described as an “extinction-level event for startups” after the collapse of a top lender in the industry.

    Startups raced to line up loans from venture funds and fintech firms to make payroll. Venture-backed retailers hosted last-minute sales to boost their cash reserves. And at least one prominent startup accelerator convinced thousands of CEOs and founders to sign an “urgent” petition calling for Treasury Secretary Janet Yellen and others to offer “relief.”

    Then, late Sunday, federal officials stepped in to guarantee that all customers of the failed Silicon Valley Bank would have access to their full deposits on Monday. The sense of relief was palpable throughout the tech sector.

    “Obviously, I’m quite relieved,” said Stefan Kalb, co-founder and CEO of Seattle-based startup Shelf Engine, who told CNN that his company would have had to shut down by the end of the week without the government intervention. “It was a very stressful weekend and I’m quite relieved with the news.”

    Parker Conrad, the CEO of HR platform Rippling, who had previously said some customers’ payrolls were being delayed by the bank failure, tweeted Sunday: “Anyone else breathing a sigh of relief and looking forward to a good night’s sleep tonight?”

    And Garry Tan, the CEO of tech startup accelerator Y Combinator who authored the petition to Yellen, praised the federal government for “decisive action.” Tan, the investor who had previously warned of “an *extinction level event* for startups” that would “set startups and innovation back by 10 years or more,” added his appreciation on Sunday for “everyone who helped us through a very very intense time.”

    But even as the tech industry enjoys a respite from a fearful weekend, unknowns remain. “You can feel the collective *sigh*,” Ryan Hoover, a tech founder and investor wrote on Twitter Sunday. “I’m still nervous,” he added. “Hard to predict the collateral effects.”

    It’s unclear how the aftershocks of the bank’s collapse will add to the startup industry’s growing challenges accessing capital. SVB’s collapse also risks changing how the world, and prospective recruits, think of Silicon Valley.

    For years, the term itself conjured an image of an enclave of bright, contrarian, libertarian engineers and thinkers who could see around corners and make big bets on the future. Now, that same industry is relying on the federal government to survive after failing to see the risk, or worse, contributing to it through a shared hysteria.

    In the chaotic days leading up to the bank’s collapse on Friday, some venture firms reportedly urged their portfolio companies to withdraw their money, which may have contributed to the bank failing.

    Then, over the weekend, many venture capitalists and tech founders banded together to try and lobby government and public goodwill towards saving the companies impacted by Silicon Valley Bank’s sudden collapse.

    While some VCs appeared to embrace fear-mongering on Twitter, much of the public messaging focused on the small businesses with exposure to Silicon Valley Bank that might be not be able to continue operating after losing access to the money in their bank account.

    “We are not asking for a bailout for the bank equity holders or its management; we are asking you to save innovation in the American economy,” the Y Combinator petition stated. “We ask for relief and attention to an immediate critical impact on small businesses, startups, and their employees who are depositors at the bank.”

    A separate coalition of more than a dozen venture capital firms, including Lightspeed Venture Partners and Upfront Ventures, released a joint statement late Friday supporting Silicon Valley Bank, given its unique and vital role in the startup economy. The bank worked with nearly half of all venture-backed tech and healthcare companies in the United States.

    “For forty years, it has been an important platform that played a pivotal role in serving the startup community and supporting the innovation economy in the US,” the statement read. “In the event that SVB were to be purchased and appropriately capitalized, we would be strongly supportive and encourage our portfolio companies to resume their banking relationship with them.”

    Even before the bank’s collapse, the startup industry was in a tough moment. Venture capital funding had dwindled amid rising interest rates and broader macroeconomic uncertainty; tech companies were cutting staff and ambitious projects; and some of the biggest private companies were reportedly slashing their valuations.

    The instability at a top tech lender, and the lingering questions about its impact on other regional banks and the broader financial system, risk making it even harder for money-losing startups to access the capital they need to survive.

    President Joe Biden emphasized in remarks Monday that “no losses will be borne by the taxpayers” related to the government’s intervention for Silicon Valley Bank. But some are already skeptical of that statement, including Democratic Sen. Elizabeth Warren of Massachusetts, who wrote in an op-ed Monday morning, “We’ll see if that’s true.”

    More immediately, there’s uncertainty around how long it will take for companies to get their money out of the bank.

    As of Monday, Kalb said the money in his Silicon Valley Bank account has not been transferred yet to the new JPMorgan Chase account he set up for Shelf Engine on Thursday. “I’ve been obsessively checking my email,” he said. “Hopefully the money will be able to be transferred shortly.”

    Ben Kaufman, the co-founder of venture-backed toy store and online retailer Camp, told CNN’s Poppy Harlow in an interview Monday morning that he and his team spent the weekend trying to “fight for survival,” including holding a last-minute 40% off sale, using the code “BANKRUN,” to raise capital over the weekend.

    “We did not know how long it was going to take for us to get our cash out … we still kind of don’t, they say today, we’ll see what happens,” he said, noting the bank held 85% of his company’s assets. “We hope we can, and we’re so grateful that the Fed stepped in, and the way they did.”

    When asked if the past week’s events would change how and where he stores his money, Kaufman said that is “going to have to be a consideration moving forward.”

    “I don’t want to do this again,” he said.

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  • Camp toy store pleads for help after Silicon Valley Bank collapse | CNN Business

    Camp toy store pleads for help after Silicon Valley Bank collapse | CNN Business

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    New York
    CNN
     — 

    A toy company based in New York has gotten caught up in the collapse of Silicon Valley Bank and is pleading with customers for help keeping it afloat.

    Camp, a venture-backed retailer, sent an email to customers Friday announcing it was slashing prices and would use sales to help fund its continued operations after much of its money was tied up in the bank failure.

    “Unfortunately, we had most of our company’s cash assets at a bank which just collapsed. I’m sure you’ve heard the news,” co-founder Ben Kaufman said in an email to customers.

    He urged customers to use the code “BANKRUN” to save 40% off all merchandise, in an apparent nod to the run on the bank that may have helped bring down the Silicon Valley lender. Camp also said customers could pay full price, which it said would be appreciated.

    Kaufman said the company was “hopeful that this will be resolved soon.”

    CNN has not confirmed if Camp had funds with Silicon Valley Bank when the bank collapsed.

    Silicon Valley Bank was put under control of the US Federal Deposit Insurance Corporation on Friday, capping off a stunning 48 hour period during which fears of a liquidity crisis at the firm prompted some startups to weigh withdrawing funds.

    The sudden collapse of the Silicon Valley lender has pushed tech investors and startups to scramble to figure out their financial exposure to the bank, with founders worrying about getting their money out, making payroll and covering operating expenses.

    The rapidly unfolding fallout at Silicon Valley Bank comes at a challenging moment for startup and tech industries. Rising interest rates have eroded the easy access to capital that helped fuel soaring startup valuations and funded ambitious, money-losing projects.

    Kaufman, a former BuzzFeed executive, founded Camp in 2018. It has nine stores in California, Connecticut, Massachusetts, New York, New Jersey and Texas.

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  • Mental health startup exposes the personal data of more than 3 million people | CNN Politics

    Mental health startup exposes the personal data of more than 3 million people | CNN Politics

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    Washington
    CNN
     — 

    A mental health startup exposed the personal data of as many as 3.1 million people online. In some cases, possibly sensitive information on mental health treatment was leaked, according to a company statement and a Department of Health and Human services filing.

    Cerebral, a California-based firm that connects people suffering from anxiety and depression with mental health professionals via video calls, said it discovered the “inadvertent” data exposure more than three years after it started using “pixels” – a common method that companies and advertisers use to track user behavior for marketing purposes.

    The company determined in January that tracking pixels had been sharing client and user data to “third-party platforms” and “subcontractors” that it didn’t name, according to a privacy notice near the bottom of its website.

    Cerebral said it was unaware of any misuse of the protected health information that was disclosed. But privacy advocates have for years warned that such data troves can be used to aggressively market products at consumers and infringe on their privacy.

    Some of the data potentially exposed in the Cerebral breach includes answers to online “self-assessments” about mental health that Cerebral asks prospective clients to fill out. That can include questions on whether someone is experiencing panic attacks, abusing alcohol or has a personality disorder, CNN’s review of the online assessments found.

    Cerebral said in a statement to CNN on Friday that it was “committed to correcting historical errors and leading the industry in privacy standards moving forward.”

    Cerebral notified the Department of Health and Human Services (HHS), which said in a filing this month that the breach affects over 3.1 million users. The department investigates potential violations of the Health Insurance Portability and Accountability Act (HIPAA), a law that requires medical providers to safeguard patient data.

    Rachel Seeger, a spokesperson for the HHS Office for Civil Rights, said the office typically “does not comment on open or potential investigations.”

    Cerebral said in its public statement that it had disabled the tracking pixels on its platforms and stopped sharing data with subcontractors “not able to meet all HIPAA [Health Insurance Portability and Accountability Act] requirements.”

    “It is important to note that Cerebral never impermissibly transmitted clinician generated notes or clinician communications,” the company told CNN.

    Cerebral spokesperson Chris Savarese did not respond to emailed questions about which and how many platforms and contractors to which the company disclosed the client health information.

    Some analysts argue that the broader market for data tracking tools is out of control. A group of conservative Catholics has spent millions of dollars to buy mobile data that identified priests who used gay dating and hookup apps, the Washington Post reported this week.

    Andrea Downing, who has done extensive research on pixel tracking and privacy, said patients are often unaware of how much personal data health care startups collect and potentially transmit to other parties.

    “What is in the fine print or the details of how data is being shared for advertising is not apparent to us when we’re going through the trauma of a diagnosis and seeking knowledge,” said Downing, who is co-founder of Light Collective, a digital rights nonprofit.

    “The only thing that is incentivizing change right now is the threat of liability,” Downing told CNN.

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  • Missing Chinese CEO is being investigated by authorities, company says | CNN Business

    Missing Chinese CEO is being investigated by authorities, company says | CNN Business

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    New York
    CNN
     — 

    Missing Chinese CEO Bao Fan is cooperating in an investigation by “certain authorities in the People’s Republic of China,” his company said in a statement Sunday.

    China Renaissance Holdings Limited, of which Bao is the chairman and CEO, said the company has been trying to locate him and ascertain his status since the announcement he disappeared on February 16.

    “The Board would like to reiterate that the business and operations of the Group are continuing normally,” a statement from the company said. “The Company will duly cooperate and assist with any lawful request from the relevant PRC authorities, if and when made.”

    Bao is not the first business executive to go missing, in a country where they can suddenly and mysteriously disappear. Real estate tycoon Ren Zhiqiang disappeared for several months after he allegedly spoke out against Chinese leader Xi Jinping in 2020. He was then jailed for 18 years. Anbang chairman Wu Xiaohui was reportedly detained by authorities as part of a government investigation. He too was eventually jailed for 18 years.

    The company, an investment bank and private equity firm based in Beijing, added it is monitoring the situation and will release further statements “when appropriate.”

    Bao is known as a veteran deal maker in China’s tech industry. He helped broker the 2015 merger between two of the country’s leading food delivery services, Meituan and Dianping. Today, the combined company’s “super app” platform is ubiquitous in China.

    Bao started his investment banking career in the late 1990s at Morgan Stanley and Credit Suisse and later went on to serve as an adviser to the stock exchanges in Shanghai and Shenzhen.

    His team has also invested in US-listed Chinese electric vehicle makers Nio

    (NIO)     and Li Auto, and helped Chinese internet giants Baidu

    (BIDU)     and JD.com

    (JD)     complete their secondary listings in Hong Kong.

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  • Amazon closes its acquisition of One Medical, but scrutiny of the deal is not over | CNN Business

    Amazon closes its acquisition of One Medical, but scrutiny of the deal is not over | CNN Business

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    Washington, DC
    CNN
     — 

    Amazon closed its acquisition of health care provider One Medical and its parent in a $3.9 billion deal on Wednesday, hours after the Federal Trade Commission said it would not challenge the purchase but that regulators were still investigating potential competitive and consumer harms of the transaction.

    The landmark deal will turn the e-commerce giant into a provider of primary medical care with access to more than 200 brick-and-mortar doctors’ offices, along with roughly 815,000 One Medical members, according to that company’s latest financial statement.

    The One Medical deal would also allow Amazon to expand its telehealth services and acquire valuable relationships with hospital systems, industry analysts have said.

    On Wednesday, Amazon said One Medical will offer new customers a $55 discount on annual memberships for a limited time.

    “We’re on a mission to make it dramatically easier for people to find, choose, afford, and engage with the services, products, and professionals they need to get and stay healthy, and coming together with One Medical is a big step on that journey,” said Neil Lindsay, senior vice president of Amazon Health Services, in a release. “One Medical has set the bar for what a quality, convenient, and affordable primary care experience should be like. We’re inspired by their human-centered, technology-forward approach and excited to help them continue to grow and serve more patients.”

    But while Amazon can consummate the deal without the immediate threat of an FTC antitrust suit, the agency is still investigating the acquisition and can still challenge the deal after the fact.

    “The FTC’s investigation of Amazon’s acquisition of One Medical continues,” said FTC spokesman Douglas Farrar. “The commission will continue to look at possible harms to competition created by this merger, as well as possible harms to consumers that may result from Amazon’s control and use of sensitive consumer health information held by One Medical.”

    The FTC plans to warn Amazon it may close the deal at its own risk, an agency official said. Known as a “pre-consummation warning,” the FTC began sending such letters to merging companies in 2021 in response to a surge in proposed deals that threatened to overwhelm regulators’ investigative capacity.

    The warning highlights the continued legal risk for Amazon and the potential concerns driving the FTC probe. Worries include not only the potential for Amazon to entrench its economic dominance but also fears that its acquisition of valuable health data could lead to the misuse of that information for other purposes, such as targeted advertising or e-commerce, the agency official said.

    Amazon’s deal to acquire One Medical follows its 2018 purchase of the online pharmacy service PillPack, which later became Amazon Pharmacy. Separately, Amazon partnered with JPMorgan Chase and Berkshire Hathaway on an effort to provide better health care services and insurance at a lower cost to workers and families at the three companies, and possibly other businesses, too. That effort, called Haven, shut down in 2021.

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  • Twitter is stumbling. Some ex-employees are launching rivals | CNN Business

    Twitter is stumbling. Some ex-employees are launching rivals | CNN Business

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    New York
    CNN
     — 

    After Sarah Oh lost her job as a human rights advisor at Twitter late last year in the first round of layoffs following Elon Musk’s chaotic acquisition of the company, she decided to join a friend in building a rival service.

    With Gabor Cselle, who previously worked at Twitter and Google, she launched T2, currently available in beta. Like Twitter, it offers a social feed of posts with 280-character limits. But the key selling point, according to Oh, is its focus on safety.

    “We really do want to create an experience that allows people to share what they want to share without fearing risk of things like abuse and harassment, and we feel like we’re really well positioned to deliver on that,” Oh told CNN.

    In the months since Musk completed his takeover, a small but growing number of services have launched or gained traction by appealing to users who are uncomfortable with the billionaire’s decisions to slash Twitter’s staff, rethink content moderation policies and reinstate numerous incendiary accounts that were previously banned, among other moves.

    The list of newer entrants in the markets includes apps like T2 and Spill created by former Twitter employees, a startup backed by one of Musk’s Twitter investors, and a service from former Twitter CEO Jack Dorsey. While some apps like T2 strongly resemble Twitter, others take a different approach.

    Last month, for example, the founders of Instagram announced Artifact, “a personalized news feed” powered by artificial intelligence, a description that quickly earned it comparisons to Twitter. In CNN’s recent test of the app, however, it resembled news reader applications like Apple News or the defunct Google Reader. Artifact displayed popular articles from large media organizations and smaller bloggers in a main feed, tailored to users based on their activity and selected interests.

    But all of these apps appear to be vying for the opportunity to scratch the itch users may feel for a news feed that isn’t Twitter — at least for as long as that itch lasts.

    “Something that we’ve heard a lot from people who are moving over from Twitter, either partially or fully, is that it is just for them a nicer experience overall,” said Jae Kaplan, co-founder of Anti Software Software club, the group that develops Cohost, a text-based social media feed similar to Twitter. The service launched publicly in June of last year, after Musk offered to buy Twitter. In November, after Musk completed the takeover, the platform saw a surge in activity, adding 80,000 users within 48 hours.

    “People have been referring to us when they do as a Twitter alternative, which I think is an important distinction from a Twitter replacement,” Kaplan said.

    Replacing Twitter, with its robust network of journalists, politicians and entertainers and sizable audience of users obsessed with real-time news, may be a challenge. While apps like Cohost have seen renewed momentum, their audiences remain a small fraction of the size of Twitter, which had more than 200 million daily active users as of last year.

    Cohost currently has 130,000 users, only 20,000 of which are what Cohost considers active users, according to Kaplan. T2 has a waitlist in the five digits, according to Oh, who says that number continues to grow. Mastodon, the most high-profile recent Twitter rival, hit 2.5 million users in November, but it has since declined to 1.4 million users, in a possible cautionary tale to other services.

    “The incumbent has the advantage of scale, and even in a situation where you have kind of a polarizing figure like Musk take over Twitter, people are realizing that the newer platforms are not nearly as effective from a one-to-many, getting your message out there,” said Tom Forte, a senior research analyst at D.A. Davidson. “Despite the fact that there may be disgruntled consumers, they’re still tweeting.”

    In November, shortly after taking over the company, Musk repeatedly claimed Twitter continued to hit “all-time high” user numbers despite the initial wave of users calling to abandon the social network. (As part of the acquisition, Musk took Twitter private and the company no longer reports user numbers in quarterly securities filings.)

    “If people leave, where do they go? By all accounts, there is no platform right now that is able to take on the function of Twitter, and nothing is really prepared for it,” said Karen North, a clinical professor at the USC Annenberg School for Communication and Journalism. “No platform has the global user base, representing people from all walks of life the way that Twitter does.”

    To complicate matters for rivals, some of the initial fury and media attention about Twitter under Musk has arguably faded in the months since the deal closed. Though controversy remains, many Twitter users may feel less urgency to jump ship today than in late October.

    Still, Mastodon founder Eugen Rochko is not worried.

    “A platform cannot continue to go viral perpetually,” Rochko recently told CNN about Mastodon’s sagging user numbers. “The cycle of media news and attention on social media just simply goes away after awhile, but behind it leaves organic growth which is what we had before November and which we still have now.”

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  • Bed Bath & Beyond is closing 150 more stores | CNN Business

    Bed Bath & Beyond is closing 150 more stores | CNN Business

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    New York
    CNN
     — 

    Bed Bath & Beyond is closing 150 more stores — just a week after the struggling retailer announced the closure of 87 locations.

    The company’s brick-and-mortar footprint has already shrunk dramatically, a regulatory filing showed late Monday, and the new closings mean it will have shuttered 400 stores in the past year — almost half the 950 or so stores it had open in February 2022.

    That includes last week’s announcement that it was also closing all 49 remaining Harmon Face Value stores, which sold cosmetics; plus 5 buybuy Baby locations. A list of the new store closures wasn’t immediately available.

    A turnaround doesn’t look imminent: The embattled home goods chain forecasts first quarter sales to be down by 30% to 40% with “sequential, quarterly sales improvement thereafter” the filing said.

    The company also said Monday it was planning to raise some $1 billion through an offering of preferred stock and warrants in a last-ditch effort to stave off bankruptcy. If it can’t complete the complex transaction, it would “likely file for bankruptcy protection.” It also appointed Holly Etlin, a bankruptcy expert, as interim chief financial officer.

    The chain has said in recent weeks that it had defaulted on a loan and may not be able to remain in business, raising concerns about its future. Bed Bath & Beyond held talks in recent days with an investment firm to underwrite a significant portion of the proposed offering, according to Reuters.

    Bed Bath and Beyond has been part of the meme stock phenomenon, with shares skyrocketing as much as 400% last year when activist investor and GameStop chairman Ryan Cohen took a stake and sought changes.

    Shares of the retailer, which closed up 92% at $5.86 in a rollercoaster session Monday, were down 40% in in pre-market trading Tuesday.

    Founded in 1971, Bed Bath & Beyond became a staple for affordable home decor, kitchenware and college dorm room furniture. It’s also known for its ubiquitous 20% off blue coupons, and cavernous stores with merchandise stacked high to the ceilings.

    But the company struggled to make the transition to online shopping and fend off larger chains such as Walmart and Target

    (TGT)    . Many shoppers switched to those competitors as the novelty of Bed Bath & Beyond’s coupons faded.

    The company was also hit hard during the pandemic, closing stores temporarily during 2020 while rivals remained open. The company lost 17% of its sales in 2020 and 14% in 2021.

    – Reuters contributed to this report

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  • Gold giant Newmont’s $16.9 billion bid for Australia’s Newcrest clouded by deal doubts | CNN Business

    Gold giant Newmont’s $16.9 billion bid for Australia’s Newcrest clouded by deal doubts | CNN Business

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    Melbourne
    Reuters
     — 

    Top gold producer Newmont

    (NEM)     Corp said it had made a $16.9 billion offer for Australian peer Newcrest

    (NCMGF)     Mining to build a global gold behemoth, although investors and analysts said it undervalued the target amid a leadership change.

    Newcrest is seeking a new boss, with previous chief executive Sandeep Biswas having stepped down in December, while global interest rates are expected to peak this year and turn down, polishing the outlook for gold prices.

    The Australian gold miner said that it was considering the all-share proposal in a filing that was a response to media speculation over the weekend. The initial feedback from shareholders is that they want a higher price, according to a person familiar with Newcrest’s deliberations.

    “A good litmus test for a reasonably-priced deal is one where both seller and buyer feel somewhat aggrieved by selling out too low or by paying too much,” said Simon Mawhinney, chief investment officer at Allan Gray, Newcrest’s largest shareholder with a 7.36% stake. “It’s not clear to me that this kind of symmetry exists with these deal terms.”

    Newcrest shares surged as much as 14.4% to A$25.60 ($17.77), the highest since May 2022, but remained below the implied current offer price of $27.16, suggesting investors were not convinced the deal would pan out. Shares closed 9.3% higher at A$24.53.

    Newmont, which is already the world’s biggest gold producer by market capitalization and by ounces produced, said the combination represented “a powerful value proposition.”

    Newcrest’s operations include its top class Cadia asset in Australia, an expanding footprint in North America and Papua New Guinea, and growth potential in copper, highly prized as key to the energy transition. BHP

    (BBL)     Group offered $6.4 billion for Australian copper miner Oz

    (OZMLF)     Minerals Minerals in December.

    The Newmont proposal is via an agreed scheme of arrangement that would need to be recommended by the Newcrest board and subject to due diligence, various regulatory approvals and a shareholder vote that could stretch out for months.

    The indicative offer implies a 21% premium to Newcrest’s last closing value of A$22.45, materially below the traditional 30% takeover premium, noted analyst Jon Mills of Morningstar, which values Newcrest at about A$31 per share.

    Newcrest shareholders would receive 0.380 Newmont shares for every Newcrest share, giving them a 30% stake in the enlarged miner. It is a 4.7% improvement from a previous 0.363 per share offer that Newcrest already rejected for not providing enough value to shareholders, Newcrest disclosed on Monday.

    If investors don’t back the deal, the board will be under pressure to improve Newcrest’s value, perhaps by breaking out assets like Havieron and Telfer in Australia, or Lihir in Papua New Guinea, said Barrenjoey analyst Dan Morgan.

    Newcrest has been expected to announce a new chief executive this year after Biswas announced his retirement after eight years.

    Sherry Duhe, formerly chief financial officer, who joined Newcrest in February last year, is interim chief executive while a global internal and external search for a replacement is underway.

    Newcrest has been viewed as a target in recent years given its middling performance, but only a handful of buyers are big enough to take it out, said an investment banker who was not authorized to speak publicly about the matter.

    The all-share nature of the offer meant the timing is more likely to be linked to Newcrest’s leadership vulnerability than a big call on the gold price, but it probably also reflects a constructive view on the precious metal, the banker added.

    Risks are growing for gold to break higher, Morgan Stanley in a note on Jan. 16, noting that its macroeconomists were now forecasting lower rates and a weaker U.S. dollar, in tailwinds for the metal.

    Morgan Stanley is looking towards a bull case of spot gold reaching $2,160 in the fourth quarter, up from $1,866 an ounce.

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  • Judge reportedly allows Meta to move forward with VR startup acquisition, in blow to FTC | CNN Business

    Judge reportedly allows Meta to move forward with VR startup acquisition, in blow to FTC | CNN Business

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    CNN
     — 

    A federal judge will not block Meta from buying a virtual reality tech startup, according to multiple reports, in a setback for the US government, which had alleged the deal would threaten competition in a nascent market.

    Tuesday’s decision, issued by the US District Court for the Northern District of California, is sealed. But according to The Wall Street Journal and The New York Times, the contents of the decision dealt Meta a victory by denying the US government’s request for a preliminary injunction that would have prevented the acquisition from closing. The New York Times cited two people with knowledge of the matter and the Wall Street Journal cited one person familiar with the ruling.

    CNN has not independently confirmed the contents of the court’s decision. The Federal Trade Commission, which had sued to block the deal last summer, declined to comment. Meta declined to comment, and several outside attorneys for the company didn’t immediately respond to requests for comment.

    The closely watched case involves Meta’s purchase of Within Unlimited, a virtual reality company and maker of a VR fitness app called “Supernatural.” The FTC’s suit had been seen as a major test for Chair Lina Khan, a critic of large tech platforms, as well as of the FTC’s unusual legal theory alleging that Meta’s deal would harm future competition in a rapidly evolving industry.

    According to the reports, the judge in the case also issued a separate order that delays Meta’s ability to close its deal for another week to allow the FTC to decide whether to appeal the ruling.

    A separate challenge to Meta’s deal is ongoing before an in-house administrative law judge at the FTC. That proceeding could continue despite Tuesday’s ruling, but whether agency officials intend to press ahead is unclear.

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