In its earnings report, Ally Bank, a big auto loan maker, provided data on past-due auto loans in the second quarter for borrowers at a range of income levels. Past-due loans were either at or close to prepandemic levels for borrowers with lower incomes.
Ally declined to provide the same data for earlier quarters, making it impossible to know how quickly past-due loans might have risen. On its earnings call, Jenn LaClair, Ally’s chief financial officer, said, “We have continued to invest in talent and technology to enhance our servicing and collection capabilities and remain confident in our ability to effectively manage credit in a variety of environments.”
Some analysts think the pullback in spending could spread to wealthier households.
“You’re going to see it go up the income scale as the year unfolds with people sitting there, saying, ‘I’ll go without rather than spend this much on that’ or ‘I’ll trade down to something more affordable,’” said Mr. O’Rourke, the JonesTrading strategist. He added that he was waiting for earnings from Macy’s and Nordstrom, which are scheduled to report in August, to see if that was happening.
The concern is that the heavy summer spending that has recently bolstered the earnings of the hospitality industries and the airlines is not sustainable. “There’s a faction of the market that’s quite convinced that when we get to the fall and the bills from the summer spending come home to roost, the consumer will be in a much trickier spot,” Mr. Barnhurst of PGIM said.
An exchange this earnings season reveals how chief executives and companies can keep the economy going, even when they fear that a downturn may be at hand.
Jamie Dimon, the chief executive of JPMorgan Chase, warned in May that storm clouds were gathering over the economy. On JPMorgan’s second-quarter earnings call, Mike Mayo, an analyst at Wells Fargo, asked Mr. Dimon why the bank had committed to investing such large sums this year if things could turn dire.
Federal Reserve officials are set to make a second abnormally large interest rate increase this week as they race to cool down an overheating economy. The question for many economists and investors is just how far the central bank will go in its quest to tame inflation.
Central banks around the world have spent recent weeks speeding up their interest rate increases, an approach they’ve referred to as “front-loading.” That group includes the Fed, which raised interest rates by a quarter-point in March, a half-point in May and three-quarters of a point in June, its biggest move since 1994. Policymakers have signaled that another three-quarter-point move is likely on Wednesday.
The quick moves are meant to show that officials are determined to wrestle inflation lower, hoping to convince businesses and families that today’s rapid inflation won’t last. And, by raising interest rates quickly, officials are aiming to swiftly return policy to a setting at which it is no longer adding to economic growth, because goosing the economy makes little sense at a moment when jobs are plentiful and prices are climbing quickly.
released in June suggested that officials would raise rates to 3.4 percent by the end of the year, up from around 1.6 percent now. Many economists have interpreted that to mean that the Fed will raise rates by three-quarters of a point this month, half of a point in September, a quarter-point in November and a quarter-point in December. In other words, it hints that a slowdown is coming.
But policy expectations have regularly been upended this year as data surprises officials and inflation proves stubbornly hot. Just this month, investors were speculating that the Fed might make a full percentage-point increase this week, only to simmer down after central bankers and fresh data signaled that a smaller move was more likely.
That changeability is a key reason that the Fed is likely to emphasize that it is closely watching economic data as it determines policy. Its next meeting is nearly two months away, in September, so central bankers will most likely want to keep their options open so that they can react to the evolving economic situation.
inflation has been running at the fastest pace in more than 40 years, it is likely to slow when July data is released because gasoline prices have come down notably this month.
And, although inflation expectations had shown signs of jumping higher, one key measure eased in early data out this month. Keeping inflation expectations in check is paramount because consumers and companies might change their behavior if they expect quick inflation to last. Workers could ask for higher pay to cover rising costs, companies might continually lift prices to cover climbing wage bills and the problem of rising prices would be perpetuated.
A variety of other metrics of the economy’s strength, from jobless claims to manufacturing measures, point to a slowing business environment. If that cooling continues, it should keep the Fed on track to slow down, said Subadra Rajappa, the head of U.S. rates strategy at Société Générale. While Fed officials want the economy to moderate, they are trying to avoid tipping it into an outright recession.
“When you start to see cracks appear in the unemployment measures, they’re going to have to take a much more cautious approach,” Ms. Rajappa said.
Markets have been quivering in recent days, concerned that central banks around the world will push their war on inflation too far and tank economies in the process. Investors are increasingly betting that the Fed might lower interest rates next year, presumably because they expect the central bank to set off a downturn.
“It is very likely that central banks will hike so quickly that they will overdo it and put their economies into a recession,” said Gennadiy Goldberg, a rates strategist at TD Securities. “That’s what markets are afraid of.”
American employers added 372,000 jobs in June, and wages continue to climb strongly. Consumer spending has eased somewhat, but less than expected. While the housing market is slowing, rents continue to pick up in many markets.
Plus, the outlook for inflation is dicey. While gas prices may be slowing for now, risks of a resurgence lie ahead, because, for example, the administration’s efforts to impose a global price cap on Russian oil exports could fall through. Rising rents mean that housing costs could help to keep inflation elevated.
While Mr. Powell made clear at his June news conference that three-quarter-point rate increases were out of the ordinary and that he did “not expect” them to be common, Fed officials have also been clear that they would like to see a string of slowing inflation readings before feeling more confident that price increases are coming under control.
“We at the Fed have to be very deliberate and intentional about continuing on this path of raising our interest rate until we get and see convincing evidence that inflation has turned a corner,” Loretta Mester, the president of the Federal Reserve Bank of Cleveland, said in a Bloomberg interview this month.
The central bank will get a fresh reading on the Personal Consumption Expenditures index — its preferred inflation gauge — on Friday. That data will be for June, and it is expected to show continued rapid inflation both on a headline basis and after volatile food and fuel prices are stripped out. The Employment Cost Index, a wage and benefits measure that the Fed watches closely, will also be released that day and is expected to show compensation climbing quickly.
Given the recent decline in prices at the gas pump, at least two months of slower inflation readings by September are possible — but not guaranteed.
“They cannot prematurely hint that they think victory over inflation is coming,” Mr. Shepherdson of Pantheon wrote.
BEIJING — The saving opportunity with the rural bank in central China looked, to Sun Song, a 26-year-old-businessman, like a great find. It would be linked to his existing account at a large, reputable state-owned bank. The rural bank was also offering high interest rates, making it seem like an ideal place to park his roughly $600,000 in savings.
Then the bank abruptly froze his account this year, and officials said they were investigating potential fraud. “I owe money on my credit card and have to repay my car loan,” he said. “I have two sons. They’re all waiting.”
The financial scandal ensnaring Mr. Sun and thousands of others across the country could pose a serious test to the ruling Communist Party, which prizes stability and its ability to control any threats to it.While the amount of money at risk is small relative to China’s economy, it strikes at the core promise of the party that it will provide a better future for the people.
slowest rate of growth since the beginning of the coronavirus pandemic.
physically attacked by a mob of men while police officers stood by. Many protesters have since reported being harassed by the police.
“The government takes our taxpayer money and then beats us,” Mr. Sun said in a phone interview before the authorities warned depositors against speaking to the media. “My worldview has been destroyed.”
tested by the economic slowdown, born in part of the government’s draconian campaign against the coronavirus and a regulatory crackdown on the once-booming real estate industry. This banking scandal has exposed more systemic issues in China’s financial system, including potential corruption and weak regulatory oversight at rural banks.
Zhiwu Chen, a professor of finance at the University of Hong Kong. “The extent of this anxiety shared by people is increasing very fast. It’s not good for social stability.”
surveillance apparatus, it is facing growing unease about the lack of safeguards to prevent the theft or misuse of personal data. Beijing’s move to censor news about one of the largest known breaches of a Chinese government computer system showed keen awareness of how security lapses can harm its credibility.
Immediately, officials tried to silence them. Censors shut down protesters’ messaging groups. The local authorities manipulated depositors’ mobile health codes — digital indicators that China uses to track coronavirus infections — to bar them from entering public spaces. But after the manipulation attracted widespread condemnation, local officials retreated, and protesters continued to gather, including on July 10.
Many of the demonstrators presented their demands as appeals, rather than challenges, to the Communist Party’s authority. Some waved Chinese flags. Others invoked Mr. Xi’s slogan of the “Chinese Dream” or carried a portrait of Mao Zedong. They were met with ferocity all the same. Men in plainclothes began hitting and kicking the protesters.
promised last week to repay the depositors — but only those who had put in less than 50,000 yuan, about $7,500, with details for the rest to be announced later. They also said they would not repay anyone who had used “additional channels” to obtain higher interest payments or those suspected of dealing with “illegal funds.”
Those stipulations were seemingly a nod to the police’s announcement about the suspected criminal gang. According to the police, the gang’s scheme included setting up illegal online platforms to solicit new customers.
Huang Lei, a lawyer in the eastern city of Hangzhou who has worked on fraud cases, said people who had unknowingly participated in an illegal scheme should still be entitled to repayment. But he acknowledged that, in reality, they might have little recourse.
“The other party is eager to characterize it as illegal — they’ve described it four or five different ways — because they don’t want to take responsibility,” he said of the authorities. Even if the depositors sued for repayment and won, he added, the bank might not have adequate assets to make them whole, and it was unclear if the state would make up the difference.
Indeed, the scandal has raised broader questions about who is accountable for the lost money, besides the suspected criminals.
the deteriorating economy has put more pressure on those same institutions. As a result, Professor Chen said, “I expect to see more rural banks having to face the same kind of problems as the Henan rural banks.”
There are most likely hidden debts spread across China’s financial sphere. The country’s seemingly unstoppable growth over the past few decades had encouraged speculative borrowing and lending behavior by everyone from online lenders to major real estate companies.
The government has sought to downplay concerns about a broader problem. China’s central bank said last week that 99 percent of China’s banking assets were “within the safe boundary.”
Still, it will now be up to the government to decide how to address the losses both in Henan and those yet to be revealed, said Michael Pettis, a professor of finance at Peking University. Officials could allow institutions to default, hurting lenders; they could squeeze workers; they could print more money, leading to inflation. In the end, Professor Pettis said, “somebody’s got to absorb the loss.”
For the Henan depositors, the fear is that it will be them.
Wang Xiaoping, a 39-year-old software industry employee from Hangzhou, said she had put about $95,000 into one of the rural banks. But all she had to show for it was an injured chin, from being attacked by a man wearing black at the Zhengzhou protest. She tried to report the assault to the police, but they told her to go to another district, she said.
“I told the police, I’m willing to die here,” she said in an interview on July 10. “This is my entire net worth, this is all of my paychecks put together, and it’s gone just like that.”
Digital payments are the default for millions of women of childbearing age. So what will their credit and debit card issuers and financial app providers do when prosecutors seek their transaction data during abortion investigations?
It’s a hypothetical question that’s almost certainly an inevitable one in the wake of the overturning of Roe v. Wade last week. Now that abortion is illegal in several states, criminal investigators will soon begin their hunt for evidence to prosecute those they say violated the law.
Medical records are likely to be the most definitive proof of what now is a crime, but officials who cannot get those may look for evidence elsewhere. The payment trail is likely to be a high priority.
HIPAA — which governs the privacy of a patient’s health records — permits medical and billing records to be released in response to a warrant or subpoena.
“There is a very broad exception to the HIPAA protections for law enforcement,” said Marcy Wilder, a partner and co-head of the global privacy and cybersecurity practice at Hogan Lovells, a law firm. But Ms. Wilder added that the information shared with law enforcement officials could not be overly broad or unrelated to the request. “That is why it matters how companies and health plans are interpreting this.”
Card issuers and networks like Visa and Mastercard generally do not have itemized lists of everything that people pay for when they shop for prescription drugs or other medications online, or when they purchase services at health care providers. But evidence of patronage of, say, a pharmacy that sells only abortion pills could give someone away.
a new state law authorizes residents to file lawsuits against anyone who helped facilitate an abortion.
“With the ruling only coming down late last week, it’s premature to understand the full impact at the state level,” Brad Russell, a USAA spokesman, said via email. “However, USAA will always comply with all applicable laws.”
American Airlines Credit Union, Bank of America, Capital One, Discover, Goldman Sachs, Prosperity Bank USA, Navy Federal Credit Union, US Bank, University of Wisconsin Credit Union, Wells Fargo and Western Union did not return at least two messages seeking comment.
American Express, Bank of America, Goldman Sachs, JPMorgan and Wells Fargo have all announced their intentions to reimburse employees for expenses if they travel to other states for abortions. So far, none have commented about how they would respond to a subpoena seeking the transaction records of the very employees who would be eligible for employer reimbursement.
Amie Stepanovich, vice president of U.S. policy at the Future of Privacy Forum, a nonprofit focused on data privacy and protection, said warrants and subpoenas can be accompanied by gag orders, which can prevent companies from even alerting their customers that they’re being investigated.
“They can choose to battle the use of gag orders in court,” she said. “Sometimes they win, sometimes they don’t.”
In other instances, prosecutors may not say exactly what they’re investigating when they ask for transaction records. In that case, it’s up to the financial institution to request more information or try to figure it out on its own.
Paying for abortion services with cash is one possible way to avoid detection, even if it isn’t possible for people ordering pills online. Many abortion funds pay on behalf of people who need financial help.
But cash and electronic transfers of money are not entirely foolproof.
“Even if you are paying with cash, the amount of residual information that can be used to reveal health status and pregnancy status is fairly significant,” said Ms. Stepanovich, referring to potential bread crumbs such as the use of a retailer’s loyalty program or location tracking on a mobile phone when making a cash purchase.
In some cases, users may inadvertently give up sensitive information themselves through apps that track and share their financial behavior.
“The purchase of a pregnancy test on an app where financial history is public is probably the biggest red flag,” Ms. Stepanovich said.
Other advocates mentioned the possibility of using prepaid cards in fixed amounts, like the kinds that people can buy off a rack in a drugstore. Cryptocurrency, they added, usually does leave enough of a trail that achieving anonymity is challenging.
One thing that every expert emphasized is the lack of certainty. But there is an emerging gut feeling that corporations will be in the spotlight at least as much as judges.
“Now, these payment companies are going to be front and center in the fight,” Ms. Caraballo said.
Square, another payments company, bought $50 million of Bitcoin and changed its name to Block, in part to signify its work with blockchain technology. Tesla bought $1.5 billion of it. The venture capital firm Andreessen Horowitz raised $4.5 billion for a fourth cryptocurrency-focused fund, doubling its previous one.
Excitement hit a peak in April last year when Coinbase, a cryptocurrency exchange, went public at an $85 billion valuation, a coming-out party for the industry. Bitcoin topped $60,000 for the first time.
Last summer, El Salvador announced that it would become the first country to classify Bitcoin as legal tender, alongside the U.S. dollar. The country’s president updated his Twitter profile picture to include laser eyes, a calling card of Bitcoin believers. The value of El Salvador’s $105 million investment in Bitcoin has been slashed in half as the price has fallen.
Senators and mayors around the United States began touting cryptocurrency, as the industry spent heavily on lobbying. Mayor Eric Adams of New York, who was elected in November, said he would take his first three paychecks in Bitcoin. Senators Cynthia Lummis, Republican of Wyoming, and Kirsten Gillibrand, Democrat of New York, proposed legislation that would create a regulatory framework for the industry, giving more authority to the Commodity Futures Trading Commission, an agency that crypto companies have openly courted.
Through the frenzy, celebrities fueled the fear of missing out, flogging their NFTs on talk shows and talking up blockchain projects on social media. This year, the Super Bowl featured four ads for crypto companies, including Matt Damon warning viewers that “fortune favors the brave.”
That swaggering optimism faltered this spring as the stock market plummeted, inflation soared and layoffs hit the tech sector. Investors began losing confidence in their crypto investments, moving money to less risky assets. Several high-profile projects crashed amid withdrawals. TerraForm Labs, which created TerraUSD, a so-called stablecoin, and Celsius, an experimental crypto bank, both collapsed, wiping out billions in value and sending the broader market into a tailspin.
SAN FRANCISCO — No one wanted to miss out on the cryptocurrency mania.
Over the last two years, as the prices of Bitcoin and other virtual currencies surged, crypto start-ups proliferated. Companies that market digital coins to investors flooded the airwaves with TV commercials, newfangled lending operations offered sky-high interest rates on crypto deposits and exchanges like Coinbase that allow investors to trade digital assets went on hiring sprees.
A global industry worth hundreds of billions of dollars rose up practically overnight. Now it is crashing down.
After weeks of plummeting cryptocurrency prices, Coinbase said on Tuesday that it was cutting 18 percent of its employees, after layoffs at other crypto companies like Gemini, BlockFi and Crypto.com. High-profile start-ups like Terraform Labs have imploded, wiping away years of investments. On Sunday, an experimental crypto bank, Celsius, abruptly halted withdrawals.
dropped by about 65 percent since autumn, and analysts predict the sell-off will continue. Stock prices of crypto companies have cratered, retail traders are fleeing and industry executives are predicting a prolonged slump that could put more companies in jeopardy.
stocks crashing, interest rates soaring and inflation high, cryptocurrency prices are also collapsing, showing they have become tied to the overall market. And as people pull back from crypto investments, the outflow is exposing the unstable foundations of many of the industry’s most popular companies.
OpenSea, the largest marketplace for the unique digital images known as nonfungible tokens, reached a staggering $13 billion valuation. And Wall Street banks such as JPMorgan Chase, which previously shunned crypto assets, and Fortune 500 companies like PayPal rolled out crypto offerings.
confidence evaporated in the early 2000s, many of the dot-coms went bust, leaving just the biggest — such as eBay, Amazon and Yahoo — standing.
Read More on the World of Cryptocurrencies
This time, investors predict there will be more survivors. “You certainly have some overhyped companies that don’t have the fundamentals,” said Mike Jones, an investor at the venture firm Science Inc. “But you also have some really strong companies that are trading way below where they should.”
There have been warning signs that some crypto companies were not sustainable. Skeptics have pointed out that many of the most popular firms offered products underpinned by risky financial engineering.
Terraform Labs, for example, offered TerraUSD, a so-called stablecoin with a fixed value linked to the U.S. dollar. The coin was hyped by its founder, Do Kwon, who raised more than $200 million from major investment firms such as Lightspeed Venture Partners and Galaxy Digital, even as critics warned that the project was unstable.
The coin’s price was algorithmically linked to a sister cryptocurrency, Luna. When the price of Luna plummeted in May, TerraUSD fell in tandem — a “death spiral” that destabilized the broader market and plunged some investors into financial ruin.
drew scrutiny from several state regulators. In the end, a drop in crypto prices appeared to put the company under more pressure than it could withstand.
With the price of Bitcoin tumbling, Celsius announced on Sunday that it was freezing withdrawals “due to extreme market conditions.” The company did not respond to a request for comment.
The market instability has also triggered a crisis at Coinbase, the largest U.S. crypto exchange. Between the end of 2021 and late March, Coinbase lost 2.2 million active customers, or 19 percent of its total, as crypto prices dropped. The company’s net revenue in the first three months of the year shrank 27 percent from a year earlier, to $1.2 billion. Its stock price has plunged 84 percent since it went public last year.
This month, Coinbase said it would rescind job offers and extend a hiring freeze to battle the economic downturn. On Tuesday, it said it would cut about 1,100 workers.
Brian Armstrong, Coinbase’s chief executive, informed employees of the layoffs in a note on Tuesday morning, saying the company “grew too quickly” as crypto products became popular.
Expand Your Cryptocurrency Vocabulary
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Bitcoin. A Bitcoin is a digital token that can be sent electronically from one user to another, anywhere in the world. Bitcoin is also the name of the payment network on which this form of digital currency is stored and moved.
Blockchain. A blockchain is a database maintained communally and that reliably stores digital information. The original blockchain was the database on which all Bitcoin transactions were stored, but non-currency-based companies and governments are also trying to use blockchain technology to store their data.
Coinbase. The first major cryptocurrency company to list its shares on a U.S. stock exchange, Coinbase is a platform that allows people and companies to buy and sell various digital currencies, including Bitcoin, for a transaction fee.
Web3. The name “web3” is what some technologists call the idea of a new kind of internet service that is built using blockchain-based tokens, replacing centralized, corporate platforms with open protocols and decentralized, community-run networks.
DAOs. A decentralized autonomous organization, or DAO, is an organizational structure built with blockchain technology that is often described as a crypto co-op. DAOs form for a common purpose, like investing in start-ups, managing a stablecoin or buying NFTs.
“It is now clear to me that we over-hired,” he wrote. A Coinbase spokesman declined to comment.
“It had been growth at all costs over the last several years,” said Ryan Coyne, who covers crypto companies and financial technology at the Mizuho Group. “It’s now turned to profitable growth.”
memo to staff, the Winklevoss twins said the industry had entered a “crypto winter.”
commercial starring the actor Matt Damon, who declared that “fortune favors the brave” as he encouraged investors to put their money in the crypto market. Last week, Crypto.com’s chief executive announced that he was laying off 5 percent of the staff, or 260 people. On Monday, BlockFi, a crypto lending operation, said it was reducing its staff by roughly 20 percent.
Gemini and BlockFi declined to comment. A Crypto.com spokesman said the company remains focused on “investing resources into product and engineering capabilities to develop world-class products.”
Cryptocurrencies have long been volatile and prone to boom-and-bust cycles. In 2013, a Chinese ban on Bitcoin sent its price tumbling. In 2017, a proliferation of companies creating and selling their own tokens led to a run-up in crypto prices, which crashed after regulators cracked down on so-called initial coin offerings.
These bubbles are built into the ecosystem, crypto enthusiasts said. They attract talented people to the industry, who go on to build valuable projects. Many of the most vocal cheerleaders encourage investors to “buy the dip,” or invest more when prices are low.
“We have been in these downward spirals before and recovered,” Mr. Jones, the Science Inc. investor, said. “We all believe in the fundamentals.”
Some of the companies have also remained defiant. During Game 5 of the N.B.A. finals on Monday night, Coinbase aired a commercial that alluded to past boom-and-bust cycles.
“Crypto is dead,” it declared. “Long live crypto.”
Joe Bruno, a former executive in the wealth management division of Wells Fargo, had long been troubled by the way his unit handled certain job interviews.
For many open positions, employees would interview a “diverse” candidate — the bank’s term for a woman or person of color — in keeping with the bank’s yearslong informal policy. But Mr. Bruno noticed that often, the so-called diverse candidate would be interviewed for a job that had already been promised to someone else.
He complained to his bosses. They dismissed his claims. Last August, Mr. Bruno, 58, was fired. In an interview, he said Wells Fargo retaliated against him for telling his superiors that the “fake interviews” were “inappropriate, morally wrong, ethically wrong.”
Wells Fargo said Mr. Bruno was dismissed for retaliating against a fellow employee.
Mr. Bruno is one of seven current and former Wells Fargo employees who said that they were instructed by their direct bosses or human resources managers in the bank’s wealth management unit to interview “diverse” candidates — even though the decision had already been made to give the job to another candidate. Five others said they were aware of the practice, or helped to arrange it.
damaged the bank’s reputation and led to more than $4.5 billion in fines.
qualified Black candidates. He later apologized for the comment when the memo became public in September.
Following Mr. Scharf’s directive, Wells Fargo adopted a formal policy in requiring that a diverse slate of candidates would have to be interviewed for all open jobs paying more than $100,000 a year.
That August, Wells Fargo paid nearly $8 million to settle a claim by the Department of Labor that it had discriminated against more than 30,000 Black job applicants for positions in banking, sales and support roles.
Wells Fargo had already been trying to increase diversity. In 2013, a group of Black financial advisers at Wells Fargo sued the bank for racial discrimination, saying they were corralled into poor neighborhoods and kept away from opportunities to win new clients and partner with white financial advisers.
The bank settled the case in 2017. Wells Fargo paid nearly $36 million to about 320 members of the class-action lawsuit, and pledged to “take actions designed to enhance opportunities for employment, earnings, and advancement of African American financial advisors and financial advisor trainees.”
sued by Black coaches, who claimed they were subject to “sham” interviews.
“Well-intentioned people created these initiatives, but when they hit the ground the energy was devoted not to implementing them but finding a way to get around them,” said Linda Friedman, the lawyer for the Black financial advisers involved in the 2017 Wells Fargo settlement.
Mr. Bruno joined Wells Fargo in 2000 and worked his way up to market leader for Wells Fargo Advisors in Jacksonville, Fla. He oversaw 14 branches of the bank’s wealth management operation. He saw himself as a champion of diversity.
Mr. Bruno was mainly responsible for filling two categories of jobs — financial advisers and financial consultants, who work alongside advisers. He said that he was often told to conduct interviews with Black candidates for the financial consultant positions, which were lower-paying jobs. In most such cases, Wells had no intention of hiring those people because either he or his superiors had already picked someone for the job, Mr. Bruno said.
Mr. Bruno said he eventually refused to conduct the interviews. “I got a Black person on the other side of the table who has no shot at getting the job,” he told his bosses.
Barry Sommers, the chief executive of Wells Fargo’s wealth and investment management business, said that fake interviews wouldn’t even have been necessary for the financial consultant positions that Mr. Bruno was hiring for. Their salaries, Mr. Sommers said, fell below the $100,000 threshold that required a diverse slate of candidates to be interviewed per Wells Fargo’s 2020 policy.
“There is absolutely no reason why anyone would conduct a fake interview,” Mr. Sommers said. Rather than tracking the identities of interviewees, the bank focused on the results, and “the numbers are getting better,” he said.
Of the nearly 26,000 people the bank hired in 2020, 77 percent were not white men, Ms. Burton said. And last year, 81 percent of the 30,000 people hired were not white men, she said. She declined to specify how many of those new hires were for jobs above the $100,000 salary threshold.
But six current and former Wells Fargo employees, including Mr. Bruno, said that fake interviews were conducted for many types of positions. Three current employees said they conducted fake job interviews or knew of them as recently as this year.
In 2018, Tony Thorpe was a senior manager for Wells Fargo Advisors in Nashville, overseeing 60 advisers. Mr. Thorpe said his boss and the human resources manager overseeing his area both told him that if he found a financial adviser worth recruiting, and that adviser wanted to bring a sales assistant along, it was permissible — but the assistant’s job had to be posted publicly.
Mr. Thorpe, who retired from Wells Fargo in 2019, said he was instructed to reach out to colleges and business associations in the area where he could meet nonwhite candidates for the assistant job. Mr. Thorpe said he never conducted a fake interview, but was required to document that he had tried to find a “diverse pool” of candidates, even though he knew exactly who would be getting the job.
“You did have to tell the story, send an email verifying what you’ve done,” Mr. Thorpe said. “You just had to show that you were trying.”
Ms. Burton said that she couldn’t speak to practices under Wells Fargo’s prior management, but that the bank kept records of every job interview. The record-keeping is necessary because the Office of the Comptroller of the Currency, the nation’s top banking regulator, conducts periodic audits. While the O.C.C. doesn’t impose its own diversity standards for banks, it does check to make sure they’re following state and federal laws, including anti-discrimination laws.
Don Banks, 31, a Black wealth manager living in Monroe, La., was contacted by Wells Fargo twice before he was hired. In 2016 and 2017, a human resources representative from the bank told Mr. Banks that he had advanced past an initial interview round for a financial adviser trainee position and would be getting a call from a manager. Both times, no one called.
Mr. Banks had been submitted to fake interviews, according to a former employee who was a manager in the area where Mr. Banks had applied, and who participated in the hiring process involving Mr. Banks’s application. The person spoke on the condition of anonymity because he still works in the industry.
Mr. Banks was eventually hired in 2018 by Wells Fargo in a more junior position. Two years later, he was laid off during cutbacks in the pandemic.
“It doesn’t sound like a great experience,” Mr. Sommers, the wealth management chief executive, said. “It shouldn’t have happened that way.”
Cryptocurrency prices also dropped precipitously. The price of Bitcoin fell as low as $26,000 on Thursday, down 60 percent from its peak in November, before rising somewhat. Since the start of the year, Bitcoin’s price movement has closely mirrored that of the Nasdaq, a benchmark that’s heavily weighted toward technology stocks, suggesting that investors are treating it like any other risk asset.
The price of Ether plunged, too, losing more than 30 percent of its value over the last week. Other cryptocurrencies, like Solana and Cardano, are also down.
Any panic might be overblown, some analysts said. A study by Mizuho showed that the average Bitcoin owner on Coinbase would not lose money until the digital currency’s price sank below $21,000. That, according to Mr. Dolev, is where a true death spiral could occur.
“Bitcoin was working as long as no one lost money,” he said. “Once it gets back to those levels, that’s sort of the ‘Oh, my God’ moment.”
Professional investors who have weathered past crypto volatility also stayed calm. Hunter Horsley, chief executive of Bitwise Asset Management, which provides crypto investing services to 1,000 financial advisers, met with more than 70 of them this week to discuss the market. Many were not selling, he said, because every other asset was down, too. Some were even trying to capitalize on the drop.
“Their standpoint is, ‘This is no fun, but there is nowhere to hide,’” he said.
Still, the plummeting prices have rattled crypto traders. Just a few months ago, blockchain proponents were predicting that Bitcoin’s price could rise as high as $100,000 this year.
“She’s well-trusted in the government and by the president,” said Sofya Donets, an economist at Renaissance Capital in Moscow who worked at the central bank from 2007 to 2019. In recent years, it was quite evident that all kinds of policy questions in the financial sphere were delegated to the central bank, she added.
This trust was built up while Ms. Nabiullina was buttressing Russia’s economy against Western sanctions, especially from the long reach of American penalties. In 2014, the United States cut off many major Russian companies from its capital markets. But these companies had large amounts of foreign currency debt, raising alarms over how they would service their debts.
The Russia-Ukraine War and the Global Economy
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A far-reaching conflict. Russia’s invasion on Ukraine has had a ripple effect across the globe, adding to the stock market’s woes. The conflict has caused dizzying spikes in gas prices and product shortages, and is pushing Europe to reconsider its reliance on Russian energy sources.
Global growth slows. The fallout from the war has hobbled efforts by major economies to recover from the pandemic, injecting new uncertainty and undermining economic confidence around the world. In the United States, gross domestic product, adjusted for inflation, fell 0.4 percent in the first quarter of 2022.
Russia’s economy faces slowdown. Though pro-Ukraine countries continue to adopt sanctions against the Kremlin in response to its aggression, the Russian economy has avoided a crippling collapse for now thanks to capital controls and interest rate increases. But Russia’s central bank chief warned that the country is likely to face a steep economic downturn as its inventory of imported goods and parts runs low.
Trade barriers go up. The invasion of Ukraine has also unleashed a wave of protectionism as governments, desperate to secure goods for their citizens amid shortages and rising prices, erect new barriers to stop exports. But the restrictions are making the products more expensive and even harder to come by.
Prices of essential metals soar. The price of palladium, used in automotive exhaust systems and mobile phones, has been soaring amid fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, another key Russian export, has also been rising.
Ms. Nabiullina set about squeezing as many U.S. dollars from the economy as possible, so that companies and banks would be less vulnerable if Washington further restricted access to the country’s use of dollars.
She also shifted the bank’s reserves, which grew to be worth more than $600 billion, toward gold, the euro and the Chinese renminbi. Over her tenure, the share of dollars in the reserves fell to about 11 percent, from more than 40 percent, Ms. Nabiullina told Parliament last month. Even after sanctions froze the bank’s overseas reserves, the country has “sufficient” reserves in gold and renminbi, she told lawmakers.
Other protections against sanctions included an alternative to SWIFT, the global banking messaging system, developed in recent years. And the bank changed the payments infrastructure to process credit card transactions in the country so even the exit of Visa and Mastercard would have minimal effect.
In March, Bloomberg News and The Wall Street Journal, citing unidentified sources, reported that Ms. Nabiullina had tried to resign after the Ukraine invasion, and had been rebuffed by Mr. Putin. The central bank rejected those reports.
Last month, the Canadian government placed her under sanctions for being a “close associate of the Russian regime.”
Still, the interest rates on the loans reflect the risk that they might not get paid back. The banks don’t hold on to the loans but sell them to other investors in the market, so if Twitter can’t pay its debts, Mr. Musk will either have to pay those investors, perhaps by selling more Tesla stock, or he could cede some part of his ownership of Twitter, diluting his stake.
Tesla had a market value of $902 billion as of Friday, but its shares have fallen by nearly 20 percent since Mr. Musk first revealed, in early April, that he had bought a big stake in Twitter. If Twitter’s finances go south, forcing Mr. Musk to sell more Tesla stock to pay Twitter’s debts or pledge more shares as collateral for his personal loans, it could put further pressure on Tesla’s stock price. Mr. Musk doesn’t take a salary from Tesla but is paid in stock that is released based on performance milestones that include the company’s share price.
Since Mr. Musk first disclosed his stake, the tech-heavy Nasdaq index has fallen more than 10 percent, making his offer appear even more generous. “It’s a high price and your shareholders will love it,” Mr. Musk said in a letter to Twitter’s board. Although the social media company’s stock had traded higher than Mr. Musk’s offer just six months ago, it slumped far below that price early this year and looked unlikely to return to those highs any time soon.
Mr. Musk has considered teaming up with investment firms in his bid to buy Twitter, which would reduce the amount of money he would personally have to invest. He could still partner with a firm or other investors like family offices to help raise cash, according to two people with knowledge of the discussions.
Thoma Bravo, a technology-focused buyout firm, has expressed willingness to provide some financing, but nothing has been decided yet. Apollo, an alternative asset manager, also looked at a possible deal where it would extend a loan on preferred terms.
If the deal math becomes unpalatable for Mr. Musk, he has an out: a breakup fee of $1 billion. For a man with an estimated fortune well over $200 billion, that’s a small price to pay.