Yellen defends efforts to stabilize banks
Treasury Secretary Janet Yellen on Thursday defended the federal government’s actions to stabilize the U.S. financial system, saying recent moves to protect depositors at two banks were aimed at preventing problems from spreading through the banking system.
Yellen, appearing before the Senate Finance Committee, also sought to reassure the public that America’s banks, whose stocks have been incredibly volatile in recent days, are “sound” and that their customer deposits are safe.
The comments were Yellen’s first since the Treasury secretary and other federal regulators moved to contain fallout from the collapse of Silicon Valley Bank. On Sunday, the Federal Reserve, the Treasury Department and the Federal Deposit Insurance Corp. announced they would make sure all depositors at Silicon Valley Bank and Signature Bank, which regulators also seized, were repaid in full.
“We wanted to make sure that the problems at Silicon Valley Bank and Signature Bank didn’t undermine confidence in the soundness of banks around the country,” Yellen said.
Yellen played a central role in the rescue effort that was undertaken in the past week, ultimately declaring that Silicon Valley Bank posed a “systemic” threat to the economy. That determination opened the door to the Federal Reserve and the FDIC guaranteeing the uninsured deposits at the failing banks.
Her testimony came as she was working behind the scenes to broker a rescue of First Republic bank, which saw its shares plummet last week amid concerns that it could fail, by coordinating a $30 billion infusion from other financial institutions. Before the hearing, Yellen spoke to regulators and top bank executives to finalize the deal that she devised Tuesday and executed with the assistance of Jamie Dimon, the CEO of JPMorgan Chase.
Novo Nordisk to cut insulin prices
Novo Nordisk, one of the world’s biggest makers of insulin, said it would cut U.S. prices for several of its products by up to 75%, following similar actions by rival Eli Lilly & Co.
Novo will reduce the list price for NovoLog and NovoLog Mix 70/30 by 75%, and cut Novolin and Levemir’s list prices by 65%, according to a statement Tuesday. It is also reducing the list price of several unbranded insulins. The changes go into effect in 2024.
Lilly said earlier this month that it would slash prices for Humalog and Humulin by 75% and cap out-of-pocket costs at $35. Those actions were hailed by President Joe Biden, who said then that other companies would do the same.
Meta slashing 10,000 more jobs
Facebook parent Meta is slashing another
Treasury Secretary Janet Yellen testifies before the Senate Finance Committee on Thursday, saying America’s banks are “sound” and that their customer deposits are safe.
10,000 jobs and will not fill 5,000 open positions as the social media pioneer cuts costs.
The company announced 11,000 job cuts in November, about 13% of its workforce at the time.
Meta and other tech companies have been hiring aggressively for at least two years and in recent months have begun to let some of those workers go.
Early last month, Meta posted falling profits and its third consecutive quarter of declining revenue.
Biden administration threatens to ban TikTok
President Joe Biden’s administration has threatened to ban TikTok from the United States unless the app’s Chinese owners agree to spin off their share of the social media platform, TikTok acknowledged Wednesday evening.
The apparent ultimatum by a U.S. multiagency panel known as the Committee on Foreign Investment in the United States marks a possible turning point in the long-running negotiations between federal officials concerned about TikTok’s links to China and a wildly popular social media company with more than 100 million U.S. users.
TikTok declined to discuss specifics of the U.S. government’s request, including details around its timing.
The company has been negotiating with CFIUS — a group composed of the Departments of Treasury, Justice, Homeland Security, Defense and Commerce, among others — for more than two years on a deal that might allow the app to continue operating in the U.S. market in the face of security and privacy concerns. nia News Publishers Association, which is sponsoring Assembly Bill 886, and to which the Southern California News Group belongs, 52% of California residents get their news through Facebook and 49% from Google. Those two Silicon Valley companies — divisions of Meta Platforms and Alphabet Inc., respectively — gobble 60% of all digital ad dollars thanks to their ability to collect consumer data.
Wicks’ bill notes that newspaper advertising has fallen 66%, and newsroom staffing has shrunk 44% over the past 10 years.
Her bill follows the December collapse of a similar Journalism Competition and Preservation Act in Congress, a bill carried by U.S. Sens. Amy Klobuchar, a Minnesota Democrat, and John Kennedy, a Louisiana Republican.
The federal bill would have waived antitrust restrictions so news publishers could join in negotiating revenue-sharing agreements with platform content providers such as Facebook and Google. Similar laws have been introduced overseas in Spain and Australia where they are known as “link taxes.”
But bipartisan support — a rarity in today’s politically divisive moment — wasn’t enough to overcome concerns not just from Google and Facebook, but from groups ranging from the American Civil Liberties
Union to the Cato Institute.
Critics argued the federal bill would prop up legacy media companies while discouraging competition from smaller, more innovative news outlets. The ACLU argued that the tech companies could potentially be compelled to share material on their sites that violate their standards.
The California bill takes a different approach. Because states cannot carve out exemptions to federal antitrust law, AB 886 would require tech platforms to directly compensate publishers with a “journalism usage fee” based on the amount of advertising revenue the platform receives from displaying a publication’s content.
“This will ensure that every publisher producing California news content, no matter the size, will be fairly compensated when Big Tech uses their content,” said Brittney Barsotti, general counsel for the CNPA.
The proposed bill “allows print, broadcast or digital news companies to secure fair compensation for their journalism and helps direct the flow of subscription and advertising dollars back to small and ethnic-owned publishers who bear the costs of production,” Barsotti said.
What the formula would be for compensating news publishers, Wicks said, is “what we’ll have to figure out through the policy process.”
Wicks also addresses another argument against the federal bill: that it would boost profits for owners of large news organizations without putting more money into their newsrooms. Her bill would require news publishers to spend 70% of the revenue received under its provisions on journalists and news production.
The bill would apply to online platforms with at least 50 million monthly U.S. active users or more than $550 billion in net annual sales or market capitalization. It prohibits those platforms from retaliating against publishers that seek compensation under the act by suppressing or refusing to provide links to their news content.
Danielle Coffey, executive vice president and general counsel for the News Media Alliance, which represents 2,000 news media outlets worldwide, said similar legislation overseas already is delivering results, with newsrooms in some cases growing 30%.
“It has absolutely worked,” Coffey said. “Newsrooms are healthier in those areas.”
It’s unknown whether the state bill will be enough to overcome anticipated opposition. Facebook and Google did not respond to requests for comment.
But Wicks said that while California is the tech industry’s home turf and it is “a big part of our economy,” the state also has led the way on important successful regulation, notably on privacy, that the industry strongly opposed.
“Politically,” Wicks said, “I think we have a shot.”