Nearly a decade ago, the United States began naming and shaming China for an onslaught of online espionage, the bulk of it conducted using low-level phishing emails against American companies for intellectual property theft.
On Monday, the United States again accused China of cyberattacks. But these attacks were highly aggressive, and they reveal that China has transformed into a far more sophisticated and mature digital adversary than the one that flummoxed U.S. officials a decade ago.
The Biden administration’s indictment for the cyberattacks, along with interviews with dozens of current and former American officials, shows that China has reorganized its hacking operations in the intervening years. While it once conducted relatively unsophisticated hacks of foreign companies, think tanks and government agencies, China is now perpetrating stealthy, decentralized digital assaults of American companies and interests around the world.
Hacks that were conducted via sloppily worded spearphishing emails by units of the People’s Liberation Army are now carried out by an elite satellite network of contractors at front companies and universities that work at the direction of China’s Ministry of State Security, according to U.S. officials and the indictment.
like Microsoft’s Exchange email service and Pulse VPN security devices, which are harder to defend against and allow China’s hackers to operate undetected for longer periods.
“What we’ve seen over the past two or three years is an upleveling” by China, said George Kurtz, the chief executive of the cybersecurity firm CrowdStrike. “They operate more like a professional intelligence service than the smash-and-grab operators we saw in the past.”
China has long been one of the biggest digital threats to the United States. In a 2009 classified National Intelligence Estimate, a document that represents the consensus of all 16 U.S. intelligence agencies, China and Russia topped the list of America’s online adversaries. But China was deemed the more immediate threat because of the volume of its industrial trade theft.
But that threat is even more troubling now because of China’s revamping of its hacking operations. Furthermore, the Biden administration has turned cyberattacks — including ransomware attacks — into a major diplomatic front with superpowers like Russia, and U.S. relations with China have steadily deteriorated over issues including trade and tech supremacy.
China’s prominence in hacking first came to the fore in 2010 with attacks on Google and RSA, the security company, and again in 2013 with a hack of The New York Times.
breach of the U.S. Office of Personnel Management. In that attack, Chinese hackers made off with sensitive personal information, including more than 20 million fingerprints, for Americans who had been granted a security clearance.
White House officials soon struck a deal that China would cease its hacking of American companies and interests for its industrial benefit. For 18 months during the Obama administration, security researchers and intelligence officials observed a notable drop in Chinese hacking.
After President Donald J. Trump took office and accelerated trade conflicts and other tensions with China, the hacking resumed. By 2018, U.S. intelligence officials had noted a shift: People’s Liberation Army hackers had stood down and been replaced by operatives working at the behest of the Ministry of State Security, which handles China’s intelligence, security and secret police.
Hacks of intellectual property, that benefited China’s economic plans, originated not from the P.L.A. but from a looser network of front companies and contractors, including engineers who worked for some of the country’s leading technology companies, according to intelligence officials and researchers.
It was unclear how exactly China worked with these loosely affiliated hackers. Some cybersecurity experts speculated that the engineers were paid cash to moonlight for the state, while others said those in the network had no choice but to do whatever the state asked. In 2013, a classified U.S. National Security Agency memo said, “The exact affiliation with Chinese government entities is not known, but their activities indicate a probable intelligence requirement feed from China’s Ministry of State Security.”
announced a new policy requiring Chinese security researchers to notify the state within two days when they found security holes, such as the “zero-days” that the country relied on in the breach of Microsoft Exchange systems.
arrested its founder. Two years later, Chinese police announced that they would start enforcing laws banning the “unauthorized disclosure” of vulnerabilities. That same year, Chinese hackers, who were a regular presence at big Western hacking conventions, stopped showing up, on state orders.
“If they continue to maintain this level of access, with the control that they have, their intelligence community is going to benefit,” Mr. Kurtz said of China. “It’s an arms race in cyber.”
WASHINGTON — When the nation’s antitrust laws were created more than a century ago, they were aimed at taking on industries such as Big Oil.
But technology giants like Amazon, Facebook, Google and Apple, which dominate e-commerce, social networks, online advertising and search, have risen in ways unforeseen by the laws. In recent decades, the courts have also interpreted the rules more narrowly.
On Monday, a pair of rulings dismissing federal and state antitrust lawsuits against Facebook renewed questions about whether the laws were suited to taking on tech power. A federal judge threw out the federal suit because, he said, the Federal Trade Commission had not supported its claims that Facebook holds a dominant market share, and he said the states had waited too long to make their case.
The decisions underlined how cautious and conservative courts could slow an increasingly aggressive push by lawmakers, regulators and the White House to restrain the tech companies, fueling calls for Congress to revamp the rules and provide regulators with more legal tools to take on the tech firms.
David Cicilline, a Democrat of Rhode Island, said the country needed a “massive overhaul of our antitrust laws and significant updates to our competition system” to police the biggest technology companies.
Moments later, Representative Ken Buck, a Colorado Republican, agreed. He called for lawmakers to adapt antitrust laws to fit the business models of Silicon Valley companies.
This week’s rulings have now put the pressure on lawmakers to push through a recently proposed package of legislation that would rewrite key aspects of monopoly laws to make some of the tech giants’ business practices illegal.
“This is going to strengthen the case for legislation,” said Herbert Hovenkamp, an antitrust expert at the University of Pennsylvania Law School. “It seems to be proof that the antitrust laws are not up to the challenge.”
introduced this month and passed the House Judiciary Committee last week. The bills would make it harder for the major tech companies to buy nascent competitors and to give preference to their own services on their platforms, and ban them from using their dominance in one business to gain the upper hand in another.
including Lina Khan, a scholar whom President Biden named this month to run the F.T.C. — have argued that a broader definition of consumer welfare, beyond prices, should be applied. Consumer harm, they have said, can also be evident in reduced product quality, like Facebook users suffering a loss of privacy when their personal data is harvested and used for targeted ads.
In one of his rulings on Monday, Judge James E. Boasberg of U.S. District Court for the District of Columbia said Facebook’s business model had made it especially difficult for the government to meet the standard for going forward with the case.
The government, Judge Boasberg said, had not presented enough evidence that Facebook held monopoly power. Among the difficulties he highlighted was that Facebook did not charge its users for access to its site, meaning its market share could not be assessed through revenue. The government had not found a good alternative measure to make its case, he said.
He also ruled against another part of the F.T.C.’s lawsuit, concerning how Facebook polices the use of data generated by its product, while citing the kind of conservative antitrust doctrine that critics say is out of step with the technology industry’s business practices.
The F.T.C., which brought the federal antitrust suit against Facebook in December, can file a new complaint that addresses the judge’s concerns within 30 days. State attorneys general can appeal Judge Boasberg’s second ruling dismissing a similar case.
fined Facebook $5 billion in 2019 for privacy violations, there were few significant changes to how the company’s products operate. And Facebook continues to grow: More than 3.45 billion people use one or more of its apps — including WhatsApp, Instagram or Messenger — every month.
The decisions were particularly deflating after actions to rein in tech power in Washington had gathered steam. Ms. Khan’s appointment to the F.T.C. this month followed that of Tim Wu, another lawyer who has been critical of the industry, to the National Economic Council. Bruce Reed, the president’s deputy chief of staff, has called for new privacy regulation.
Mr. Biden has yet to name anyone to permanently lead the Justice Department’s antitrust division, which last year filed a lawsuit arguing Google had illegally protected its monopoly over online search.
The White House is also expected to issue an executive order this week targeting corporate consolidation in tech and other areas of the economy. A spokesman for the White House did not respond to requests for comment about the executive order or Judge Boasberg’s rulings.
Activists and lawmakers said this week that Congress should not wait to give regulators more tools, money and legal red lines to use against the tech giants. Mr. Cicilline, along with Representative Jerrold Nadler of New York, the chairman of the House Judiciary Committee, said in a statement that the judge’s decisions on Facebook show “the dire need to modernize our antitrust laws to address anticompetitive mergers and abusive conduct in the digital economy.”
Senator Amy Klobuchar, a Democrat of Minnesota who chairs the Senate Judiciary Committee’s subcommittee on antitrust, echoed their call.
“After decades of binding Supreme Court decisions that have weakened our antitrust policies, we cannot rely on our courts to keep our markets competitive, open and fair,” she said in a statement. “We urgently need to rejuvenate our antitrust laws to meet the challenges of the modern digital economy.”
But the six bills to update monopoly laws have a long way to go. They still need to pass the full House, where they will likely face criticism from moderate Democrats and libertarian Republicans. In the Senate, Republican support is necessary for them to overcome the legislative filibuster.
The bills may also not go as far in altering antitrust laws as some hope. The House Judiciary Committee amended one last week to reinforce the standard around consumer welfare.
Even so, Monday’s rulings have given the proposals a boost. Bill Baer, who led the Justice Department antitrust division during the Obama administration, said it “gives tremendous impetus to those in Congress who believe that the courts are too conservative in addressing monopoly power.”
Facebook and the tech platforms might like the judge’s decisions, he said, “but they might not like what happens in the Congress.”
Isabella Casillas Guzman, President Biden’s choice to run the Small Business Administration, inherited a portfolio of nearly $1 trillion in emergency aid and an agency plagued by controversy when she took over in March. She has been sprinting from crisis to crisis ever since.
Some new programs have been mired in delays and glitches, while the S.B.A.’s best-known pandemic relief effort, the Paycheck Protection Program, nearly ran out of money for its loans this month, confusing lenders and stranding millions of borrowers. Angry business owners have deluged the agency with criticism and complaints.
Now, it’s Ms. Guzman’s job to turn the ship around. “It’s the largest S.B.A. portfolio we’ve ever had, and clearly there’s going to need to be some changes in how we do business,” she said in a recent interview.
When the coronavirus crisis struck and the economy went into a free fall last year, Congress and the Trump administration pushed the Small Business Administration to the forefront, putting it in charge of huge sums of relief money and complicated new programs.
confusing, often-revised loan terms and several technical meltdowns — the program enjoyed some success. Millions of business owners credit it with helping them survive the pandemic and keep more workers employed.
Economists are skeptical about whether the program’s results justify its huge cost, but Mr. Trump and Mr. Biden both embraced the effort as a centerpiece of their economic rescue plans. As the pandemic stretched on and the economy plunged into a recession, the Paycheck Protection Program morphed into the largest business bailout in American history. More than eight million companies got forgivable loans, totaling $788 billion — nearly as much money as the government spent on its three rounds of direct payments to taxpayers.
Fraud is a major concern. Thousands of people took advantage of the rushed program’s minimal documentation requirements and sought illicit loans, according to prosecutors, to fund gambling sprees, Lamborghinis, luxury watches, an alpaca farm and a Medicare fraud scheme. The Justice Department has charged hundreds of people with stealing more than $440 million, and scores of federal investigations are active. (During her confirmation hearing, Ms. Guzman promised that she would “prioritize the reduction of fraud, waste and abuse.”)
There were other problems. Female and minority business owners were disproportionately left out of the relief effort. A last-minute attempt by Mr. Biden to make the program more generous for solo business owners came too late to help many of them. This month, a new emergency popped up: The program ran short of money and abruptly closed to most new applicants.
“There was no warning,” Toby Scammell, the chief executive of Womply, a company that helps borrowers get loans, said of the latest debacle. His company alone has more than 1.6 million applicants caught in limbo.
low-interest disaster loans of up to $500,000 and new grant funds, created by Congress, for two of the hardest-hit industries: the Shuttered Venue Operators Grant for live-event businesses and the Restaurant Revitalization Fund. (The hotel industry is pushing for its own version.)
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Each required the agency to create policies and technology systems from scratch. The venue program has been especially rocky. On its scheduled start day, in early April, the application system completely failed, leaving desperate applicants hitting refresh and relying on social media posts for information and updates.
“I turned to my associate director and said, ‘I figured something like this would happen,’” said Chris Zacher, the executive director of Levitt Pavilion, a nonprofit performing arts center in Denver. The Small Business Administration revived the system three weeks later and has received 12,200 applications, but it does not anticipate awarding grants until late May.
have turned into primal screams of pain. (“I SERIOUSLY CANNOT TAKE THIS WITH SBA ANY LONGER” is one of the milder replies.) She said she understood the urgency.
“It’s definitely unprecedented — across the board, across the nation — and we are seeing multiple disasters at the same time,” she said. “The agency is highly focused on just still responding to disaster and implementing this relief as quickly as possible.”
This is Ms. Guzman’s second tour at the Small Business Administration. When President Barack Obama picked Maria Contreras-Sweet in 2014 to take over the agency, Ms. Guzman went along as a senior adviser and deputy chief of staff. The women had met in the mid-1990s. Ms. Guzman, a California native with an undergraduate degree from the University of Pennsylvania’s Wharton School of Business, was hired at 7Up/RC Bottling by Ms. Contreras-Sweet, an executive there.
“I was always impressed with her ability to handle jobs with steep learning curves — she has a quick grasp of complex concepts,” Ms. Contreras-Sweet said.
Ms. Guzman spent her first stint at the agency focused on traditional projects like its flagship lending program, which normally facilitates around $28 billion a year in loans. The time, the job is radically different.
community navigators” program, which will fund local organizations, including nonprofits and government groups, to work closely with businesses owned by people with disabilities or in underserved rural, minority and immigrant communities. It’s an expansion of a grass-roots effort by several nonprofits to get vulnerable businesses access to Paycheck Protection Program loans.
Ms. Guzman said she was bullish about that effort and other agency priorities, like expanding Black and other minority entrepreneurs’ access to capital — but first, like the clients it serves, the Small Business Administration has to weather the pandemic.
And to do that, it has to stop shooting itself in the foot.
The much-awaited second attempt at opening the Shuttered Venue Operators Grant fund was preceded by one final debacle: The agency announced — and then, less than a day before the date, abandoned — a plan to open the first-come-first-served fund on a Saturday. For those seeking aid that has not yet arrived, the incident felt like yet another kick in the teeth.
Ms. Guzman said she was aware of the need for her agency to overcome its limitations and rebuild its checkered reputation.
“This is a pivotal moment in time where we can leverage the interest in small business to really deliver a remarkable agency to them,” she said. “I value being the voice for the 30 million small and innovative start-ups around the country. What I always say to my staff is that I want these businesses to feel like the giants that they are in our economy.”
Tim Cook took the stand for the first time as Apple’s chief executive. The billionaire creator of one of the world’s most popular video games walked a federal judge through a tour of the so-called metaverse. And lawyers in masks debated whether an anthropomorphic banana without pants was appropriate to show in federal court.
For the past three weeks, Apple has defended itself in a federal courtroom in Oakland, Calif., against claims that it abused its power over the iPhone App Store, in one of the biggest antitrust trials in Silicon Valley’s history. Epic Games, the maker of the popular game Fortnite, sued Apple last year seeking to allow apps to avoid the 30 percent commission that the iPhone maker takes on many app sales.
On Monday, the trial — which covered esoteric definitions of markets as well as oddball video game characters — concluded with Judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California pressing the companies on what should change in Apple’s business, if anything. The decision over the case, as well as the future of the $100 billion market for iPhone apps, now rests in her hands. Judge Gonzalez Rogers has said she hopes to issue a verdict by mid-August.
Yet even in an era of antitrust scrutiny of the world’s biggest tech companies, the trial showed how difficult it was to take on a $2.1 trillion corporate titan like Apple.
more than $1 billion in sales — from the App Store. Epic also spent millions of dollars on lawyers, economists and expert witnesses. Yet it still began the trial at a disadvantage because antitrust laws tend to favor defendants, according to legal experts who tracked the case.
While Judge Gonzalez Rogers signaled openness to Epic’s arguments during the trial, a ruling in favor of the video game maker might not lead to momentous changes in the market for mobile apps. Any verdict is also likely to be tied up in appeals for years, at which point rapid change in the technology industry could leave its effects obsolete.
“To mount a credible antitrust campaign, you need to have a significant war chest,” said David Kesselman, an antitrust lawyer in Los Angeles who has followed the case. “And the problem for many smaller companies and smaller businesses is that they don’t have the wherewithal to mount that type of a fight.”
The case focused on how Apple wields control over the iPhone App Store to charge its commission on app sales. Companies big and small have argued that the fee shows Apple is abusing its dominance, while Apple has responded that its cut of sales helps fund efforts to keep iPhones safe. Regulators and lawmakers have homed in on the issue, making it the center of antitrust complaints against the company.
Tim Sweeney, Epic’s chief executive and a longtime antagonist to big tech companies, has said he is “fighting for open platforms and policy changes equally benefiting all developers.”
30 percent number has been there since the inception. And if there was real competition, that number would move. And it hasn’t,” she said of Apple’s commission on app sales. She also said that it was anticompetitive for Apple to ban companies from telling customers that they could buy items outside of iPhone apps.
At other times on Monday, she appeared reluctant to force Apple to change its business. “Courts do not run businesses,” she said.
Judge Gonzalez Rogers also suggested that Epic’s requested outcome in the case would require a significant change in Apple’s business and questioned whether there was legal precedent for that. “Give me some example that survived appellate review where the court has engaged in such a way to limit or fundamentally change the economic model of a monopolistic company?” she asked Epic’s lawyers.
ripe for a legislative fix. Apple also faces two other federal lawsuits over its app fees — one from consumers and one from developers — which are both seeking class-action status. Judge Gonzalez Rogers is also set to hear those cases.
Similarly, a victory for Apple could deflate those challenges. Regulators might be wary to pursue a case against Apple that has already been rejected by a federal judge.
Judge Gonzalez Rogers may also deliver a ruling that makes neither company happy. While Epic wants to be able to host its own app store on iPhones, and Apple wants to continue to operate as it has for years, she might order smaller changes.
Former President Barack Obama nominated Judge Gonzalez Rogers, 56, to the federal court in 2011. Given her base in Oakland, her cases have often related to the technology industry, and she has overseen at least two past cases involving Apple. In both cases, Apple won.
She concluded Monday’s trial by thanking the lawyers and court staff, who mostly used masks and face shields during the proceedings. Months ago in the throes of the coronavirus pandemic, it was unclear if the trial could be held in person, but Judge Gonzalez Rogers decided that it was an important enough case and ordered special rules to minimize the health risks, including limits on the number of people in court.
Epic opted to include its chief executive over an extra lawyer, and Mr. Sweeney spent the trial inside the courtroom, watching from his lawyers’ table. Mr. Sweeney, who is typically prolific on Twitter, didn’t comment publicly over the last three weeks. On Monday, he broke his silence by thanking the Popeyes fried-chicken restaurant next to the courthouse.
WASHINGTON — When Communist Chinese forces began shelling islands controlled by Taiwan in 1958, the United States rushed to back up its ally with military force — including drawing up plans to carry out nuclear strikes on mainland China, according to an apparently still-classified document that sheds new light on how dangerous that crisis was.
American military leaders pushed for a first-use nuclear strike on China, accepting the risk that the Soviet Union would retaliate in kind on behalf of its ally and millions of people would die, dozens of pages from a classified 1966 study of the confrontation show. The government censored those pages when it declassified the study for public release.
The document was disclosed by Daniel Ellsberg, who leaked a classified history of the Vietnam War, known as the Pentagon Papers, 50 years ago. Mr. Ellsberg said he had copied the top secret study about the Taiwan Strait crisis at the same time but did not disclose it then. He is now highlighting it amid new tensions between the United States and China over Taiwan.
has been known in broader strokes that United States officials considered using atomic weapons against mainland China if the crisis escalated, the pages reveal in new detail how aggressive military leaders were in pushing for authority to do so if Communist forces, which had started shelling the so-called offshore islands, intensified their attacks.
leaving them in the control of Chiang Kai-shek’s nationalist Republic of China forces based on Taiwan. More than six decades later, strategic ambiguity about Taiwan’s status — and about American willingness to use nuclear weapons to defend it — persist.
The previously censored information is significant both historically and now, said Odd Arne Westad, a Yale University historian who specializes in the Cold War and China and who reviewed the pages for The New York Times.
“This confirms, to me at least, that we came closer to the United States using nuclear weapons” during the 1958 crisis “than what I thought before,” he said. “In terms of how the decision-making actually took place, this is a much more illustrative level than what we have seen.”
Drawing parallels to today’s tensions — when China’s own conventional military might has grown far beyond its 1958 ability, and when it has its own nuclear weapons — Mr. Westad said the documents provided fodder to warn of the dangers of an escalating confrontation over Taiwan.
Gen. Laurence S. Kutner, the top Air Force commander for the Pacific. He wanted authorization for a first-use nuclear attack on mainland China at the start of any armed conflict. To that end, he praised a plan that would start by dropping atomic bombs on Chinese airfields but not other targets, arguing that its relative restraint would make it harder for skeptics of nuclear warfare in the American government to block the plan.
“There would be merit in a proposal from the military to limit the war geographically” to the air bases, “if that proposal would forestall some misguided humanitarian’s intention to limit a war to obsolete iron bombs and hot lead,” General Kutner said at one meeting.
like Neil Sheehan of The Times.
in 2017, when he published a book, “Doomsday Machine: Confessions of a Nuclear War Planner.” One of its footnotes mentions in passing that passages and pages omitted from the study are available on his website.
But he did not quote the study’s material in his book, he said, because lawyers for his publisher worried about potential legal liability. He also did little else to draw attention to the fact that its redacted pages are visible in the version he posted. As a result, few noticed it.
One of the few who did was William Burr, a senior analyst at George Washington University’s National Security Archive, who mentioned it in a footnote in a March blog post about threats to use nuclear weapons in the Cold War.
Mr. Burr said he had tried more than a decade ago to use the Freedom of Information Act to obtain a new declassification review of the study — which was written by Morton H. Halperin for the RAND Corporation — but the Pentagon was unable to locate an unabridged copy in its files. (RAND, a nongovernmental think tank, is not itself subject to information act requests.)
Mr. Ellsberg said tensions over Taiwan did not seem as urgent in 2017. But the uptick in saber-rattling — he pointed to a recent cover of The Economist magazinethat labeled Taiwan “the most dangerous place on Earth” and a recent opinion column by The Times’s Thomas L. Friedman titled, “Is There a War Coming Between China and the U.S.?” — prompted him to conclude it was important to get the information into greater public view.
Michael Szonyi, a Harvard University historian and author of a book about one of the offshore islands at the heart of the crisis, “Cold War Island: Quemoy on the Front Line,” called the material’s availability “hugely interesting.”
Any new confrontation over Taiwan could escalate and officials today would be “asking themselves the same questions that these folks were asking in 1958,” he said, linking the risks created by “dramatic” miscalculations and misunderstandings during serious planning for the use of nuclear weapons in 1958 and today’s tensions.
Mr. Ellsberg said he also had another reason for highlighting his exposure of that material. Now 90, he said he wanted to take on the risk of becoming a defendant in a test case challenging the Justice Department’s growing practice of using the Espionage Act to prosecute officials who leak information.
Enacted during World War I, the Espionage Act makes it a crime to retain or disclose, without authorization, defense-related information that could harm the United States or aid a foreign adversary. Its wording covers everyone — not only spies — and it does not allow defendants to urge juries to acquit on the basis that disclosures were in the public interest.
Using the Espionage Act to prosecute leakers was once rare. In 1973, Mr. Ellsberg himself was charged under it, before a judge threw out the charges because of government misconduct. The first successful such conviction was in 1985. But it has now become routine for the Justice Department to bring such charges.
Most of the time, defendants strike plea deals to avoid long sentences, so there is no appeal. The Supreme Court has not confronted questions about whether the law’s wording or application trammels First Amendment rights.
Saying the Justice Department should charge him for his open admission that he disclosed the classified study about the Taiwan crisis without authorization, Mr. Ellsberg said he would handle his defense in a way that would tee the First Amendment issues up for the Supreme Court.
“I will, if indicted, be asserting my belief that what I am doing — like what I’ve done in the past — is not criminal,” he said, arguing that using the Espionage Act “to criminalize classified truth-telling in the public interest” is unconstitutional.
The government’s $788 billion relief effort for small businesses ravaged by the coronavirus pandemic, the Paycheck Protection Program, is ending as it began, with the initiative’s final days mired in chaos and confusion.
Millions of applicants are seeking money from the scant handful of lenders still making the government-backed loans. Hundreds of thousands of people are stuck in limbo, waiting to find out if their approved loans — some of which have been stalled for months because of errors or glitches — will be funded. Lenders are overwhelmed, and borrowers are panicking.
“Some of our lenders have been getting death threats,” said Toby Scammell, the chief executive of Womply, a loan facilitator that has nearly 1.6 million applications awaiting funding. “There’s a lot of angry, scared people who were really counting on this program and are afraid of being shut out.” More funding seems unlikely. Congress twice extended the program in December and March, anteing up nearly $300 billion total in new aid, but there is little indication that it will do so again.
The relief program had been scheduled to keep taking applications until May 31. But two weeks ago, its manager, the Small Business Administration, announced that the program’s $292 billion in financing for forgivable loans this year had nearly run out and that it would immediately stop processing most new applications.
reaching businesses owned by women and minorities, a priority for the Biden administration. But they are not intended to operate on a large scale — and suddenly thousands of desperate borrowers were beating down their door.
“I’m averaging 150 calls a day,” said Brooke Mirenda, the chief executive of the Sunshine State Economic Development Corporation, a Florida lender. “When you’re talking to borrowers who are crying because there’s $8,000 at stake and for them it’s months of their mortgage payment — that’s a really huge deal.”
In something akin to a game of musical chairs, banks and other lenders are now frantically trying to find community financial institutions to take over their backlog of applications. Even though most focus on underserved borrowers, they can process loans for any qualified applicant — but very few have the capacity to do that in large numbers.
contact community financial institutions to determine which ones are lending, but those who have tried said the effort was often fruitless.
Sheri, a photographer in Brooklyn who asked that her last name not be used to protect her privacy, wrote to more than a dozen lenders. Three replied. One was not offering P.P.P. loans, one said she did not meet its qualification rules, and the other requested more information and did not confirm whether or not it could offer her a loan.
Representatives of the Small Business Administration did not directly answer questions about the challenges of finding a willing lender.
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“Community-based financial lenders play a key role in generating economic growth and opportunity in some of our most distressed communities,” Patrick Kelley, the head of the agency’s Office of Capital Access, said in a written statement.
“In just over seven days, more than 450 C.F.I.s have processed over 273,000 Paycheck Protection Program applications totaling $4.6 billion, more than 50 percent of the $9 billion remaining one week ago,” he added.
The Paycheck Protection Program has had a rocky road since its inception. Its early days, in April 2020, were plagued by technology problems and confusing rules. Big banks rebuffed many borrowers, and some prioritized bigger and wealthier businesses.
Fraud has been a constant challenge, too, and the Justice Department has charged hundreds of people with taking loans illegally. Many of the tiniest businesses were entirely shut out; a late move by the Biden administration to get more money to solo business owners wreaked havoc for lenders and contributed to the recent deluge of applications.
Now, an additional bottleneck is causing turmoil: Banks and other mainstream lenders are racing to finalize hundreds of thousands of applications that were still in progress when the Small Business Administration closed the program to new applications. Those loans could still be funded, the agency told them, but they would need to move fast.
That set off a panic, with anguished applicants besieging overwhelmed lenders — especially so-called fintechs, a group of online lenders that cranked out P.P.P. loans at a blistering pace. Many took on more customers than they could handle and are now struggling to manage irate borrowers clamoring for help and information.
George Greenfield, the owner of CreativeWell, a small literary agency and speakers’ bureau in Montclair, N.J., applied in March for a loan from Biz2Credit, a fintech lender.
But Mr. Greenfield’s application was complicated — he’s a sole proprietor, but one who, before the pandemic, had part-time employees — and Biz2Credit’s system struggled to accurately calculate his loan amount. The initial amount he was offered was less than a quarter of what he was eligible for.
Mr. Greenfield and his accountant spent more than a month trying to get the mistake fixed, with no success. Emails went unanswered. Online customer service agents could not help. And when the S.B.A. cut off new loans, his problem became urgent: If he abandoned his Biz2Credit application, he feared he would not be able to find a new lender.
“My blood is boiling,” Mr. Greenfield said last week of his stalled application. “This company has no regard for the small-business owners they said they wanted to serve.”
After a New York Times reporter contacted Biz2Credit, a company agent quickly called Mr. Greenfield and untangled his application. Within hours, he had the paperwork to finalize his loan for the correct amount. He was happy with the outcome but infuriated by the process.
Rohit Arora, the chief executive of Biz2Credit, acknowledged that Mr. Greenfield was not alone in his frustration. “We were thrown off guard by the S.B.A. shutdown,” he said. “They’re running a very chaotic program. There hasn’t been much communication.”
Biz2Credit processed more than 182,000 P.P.P. loans this year, but Mr. Arora estimated that he had tens of thousands of stranded applications that his company would be unable to fund. “For the last week, we’ve been slammed,” Mr. Arora said. “The customers have been very angry, very frustrated, very scared. I can understand.”
“It would have been an amazing merger,” said David Barden, a senior research analyst at Bank of America. “It would have kind of perpetuated the AT&T juggernaut of growth through acquisition — not through organic — but it failed.”
Mr. Stephenson then looked to the attractive profit margins found in media and entertainment. In 2014, he announced a deal for DirecTV, a transaction that he promised would “redefine the industry.”
But AT&T bought into the pay-TV industry at its peak. Not long after it acquired the satellite service, consumers left in droves.
“One thing they didn’t — they could not have anticipated, was that 2014 was the last year linear video would grow,” Mr. Barden, referring to the cable TV business. “Because who was out there in the wings? This little company called Netflix.” Customers began to cut their cords and cable subscriptions began their descent.
Then came Time Warner. Numerous analysts pointed out that owning a company that makes money by distributing shows and films as widely as possible wouldn’t give AT&T any advantage. In other words, it would still have to license HBO and CNN to rivals like Verizon’s television service, or to cable giants like Comcast. AT&T would have a hard time justifying keeping the content for itself.
The Justice Department sued AT&T to block the deal, but it lost its case in court.
Makan Delrahim, the former Justice Department antitrust chief who oversaw the suit, said in an interview that AT&T’s rampant deal making was a “classic case” of corporate misbehaving. The company “did a series of mergers and acquisitions and really were not rational for their business execution,” he said, “T-Mobile, DirecTV and Time Warner. And this is the result.”
Mr. Whitacre, the founding chief executive of the modern AT&T, offered another view.
“The deals we made while I was chairman — which was a long time — was acquiring the businesses that we were familiar with, the businesses we were in,” he said in an interview. “And when I left, that changed.”
Mr. Whitacre, who is still an AT&T shareholder, said he liked the Discovery deal, getting the company back to “where we came from, if you would.”
Boeing says it has received approval from U.S. aviation authorities for proposed fixes to an electrical problem that grounded a portion of its troubled 737 Max fleet for more than a month. The approval is welcome news for the handful of affected airlines in the United States, where the industry is preparing for a busy summer.
The 737 Max plane was initially grounded in March 2019 after a pair of crashes, separated by months, in Indonesia and Ethiopia. Last November, the Federal Aviation Administration cleared the fleet to fly again provided that Boeing and airlines updated the Max’s flight control software and rerouted some electrical wiring, among other changes.
In December, the plane carried paying passengers in the United States for the first time since the crashes. But last month, Boeing said it had notified 16 airlines and other customers of a potential electrical problem with the Max and recommended that they temporarily stop flying some planes.
Boeing and the F.A.A. said last month that the latest electrical issue was unrelated to the 2019 grounding directive.
said in a notice that the electrical power systems on a new 737 Max 8 airplane “did not perform as expected” during routine tests before it was delivered to an airline. It said the same issue affected certain models of the 737 Max 8 and the 737 Max 9.
Specifically, the notice, known as an airworthiness directive, said design changes to support panels in the Max’s flight deck, or cockpit, had resulted in “insufficient electrical grounding of installed equipment.”
The problem could have resulted in loss of critical functions and other problems on the flight deck, the notice said. It directed Boeing to send comments about proposed modifications by mid-June.
Boeing said in a brief statement on Wednesday that it had received final approval from the regulator for the proposed modifications and issued “service bulletins for the affected fleet.” Airline manufacturers typically issue service bulletins to notify a plane’s owner about a change or improvement in a component.
Boeing also said that airlines were preparing to return the affected jets to service and that it planned to resume deliveries of the plane. The company did not provide a timeline or further details.
reported earlier by The Wall Street Journal.
Boeing also appeared to make progress this week on another issue affecting a different model of plane, the 777. Dozens of 777 planes equipped with a Pratt & Whitney engine were grounded worldwide in February after one suffered an engine failure over Colorado. Video of the episode was startling, though the pilots landed the plane safely and no injuries were reported.
After that engine failure, the F.A.A. required that all fan blades in that type of engine be inspected. On Wednesday, the agency’s administrator, Steve Dickson, said the agency was also requiring that manufacturers strengthen the engine cowling, or housing. The “exact timing and requirements” of such a fix had not been determined, the agency said in a statement.
The 2019 crashes aboard the 737 Max killed 346 people and deeply damaged Boeing’s once-sterling reputation. The company later fired its chief executive and paid billions of dollars in fines, settlements and lost orders.
In January, Boeing agreed to pay more than $2.5 billion in a legal settlement with the Justice Department stemming from the 737 Max debacle. The agreement resolved a criminal charge that had centered on the actions of two employees who withheld information from the F.A.A. about changes made to software that was later implicated in both crashes.
WASHINGTON — As the East Coast suffered from the effects of a ransomware attack on a major petroleum pipeline, President Biden signed an executive order on Wednesday that placed strict new standards on the cybersecurity of any software sold to the federal government.
The move is part of a broad effort to strengthen the United States’ defenses by encouraging private companies to practice better cybersecurity or risk being locked out of federal contracts. But the bigger effect may arise from what could, over time, become akin to a government rating of the security of software products, much the way automobiles get a safety rating or restaurants in New York get a health safety grade.
The order comes amid a wave of new cyberattacks, more sophisticated and far-reaching than ever before. Over the past year, roughly 2,400 ransomware attacks have hit corporate, local and federal offices in extortion plots that lock up victims’ data — or publish it — unless they pay a ransom.
The most urgent fear is an attack on critical infrastructure, a point made clear this week to Americans, who were panic-buying gasoline. A ransomware attack on Colonial Pipeline’s information systems forced the company to shut down a critical pipeline that supplies 45 percent of the East Coast’s gasoline, diesel and jet fuel for several days.
SolarWinds hack, in which Russia’s premier intelligence agency altered the computer code of an American company’s network management software. It gave Russia broad access to 18,000 agencies, organizations and companies, mostly in the United States.
The new order also requires all federal agencies to encrypt data, whether it is in storage or while it is being transmitted — two very different challenges. When China stole 21.5 million files about federal employees and contractors holding security clearances, none of the files were encrypted, meaning they could be easily read. (Chinese hackers, investigators later concluded, encrypted the files themselves — to avoid being detected as they sent the sensitive records back to Beijing.)
Previous efforts to mandate minimum standards on software have failed to get through Congress, notably in a major showdown nine years ago. Small businesses have said the changes are not affordable, and larger ones have opposed an intrusive role of the federal government inside their systems.
But Mr. Biden decided it was more important to move quickly than to try to fight for broader mandates on Capitol Hill. His aides said it was a first step, and industry officials said it was bolder than they expected.
Amit Yoran, the chief executive of Tenable and a former cybersecurity official in the Department of Homeland Security, said the question on everyone’s mind was whether Mr. Biden’s order would stop the next Colonial or SolarWinds attacks.
“No one policy, government initiative or technology can do that,” Mr. Yoran said. “But this is a great start.”
Government officials have complained that Colonial had poor defenses, and while it established a hard shell around its computer networks, it had no way of monitoring an adversary who got inside. The Biden administration hopes the standards set out in the executive order, requiring multifactor authentication and other safeguards, will become widespread and improve security globally.
Senator Mark Warner, Democrat of Virginia and the chairman of the Senate Intelligence Committee, praised the order but said it would need to be followed by congressional action.
Mr. Warner said recent attacks “have highlighted what has become increasingly obvious in recent years: that the United States is simply not prepared to fend off state-sponsored or even criminal hackers intent on compromising our systems for profit or espionage.”
The new order is the first major public part of a multilayered review of defensive, offensive and legal strategies to take on adversaries around the world. This executive order, however, focuses entirely on deepening defenses, in hopes of deterring attackers because they fear they would fail — or run a higher risk of being detected.
The Justice Department is ramping up a new task force to take on ransomware, after the discovery in recent months that such attacks are more than just extortion, they can bring down sectors of the economy.
Mr. Biden announced sanctions against Russia for the SolarWinds hack, and his national security adviser, Jake Sullivan, has said there will also be “unseen” consequences. So far, the United States has not taken similar action against China’s government for its presumed involvement in another attack, exploiting holes in a Microsoft system used by large companies around the world.
The executive order was first drafted in February in response to the SolarWinds intrusion. That attack was especially sophisticated because hackers working for the Russian government managed to change code under development by the company, which unsuspectingly distributed the malware in an update to its software packages. It was discovered during Mr. Biden’s transition and led him to declare he could not trust the integrity of federal computer systems.
The review board created under the executive order will be co-led by the secretary of homeland security and a private-sector official, based on the specific episode it is investigating at the time, in an effort to win over industry executives who fear the investigations could be fodder for lawsuits.
Because it was created by an executive order, not an act of Congress, the new board will not have the same broad powers as a safety board. But officials are still hopeful it will be valuable in learning of vulnerabilities, improving security practices and urging companies to invest more in improving their networks.
Much of the executive order is focused on information sharing and transparency. It aims to speed the time companies that have been victimized by a hack or discover vulnerabilities share that information with the Cybersecurity and Infrastructure Security Agency.
WASHINGTON — A Justice Department lawyer said in federal court on Monday that, even as the Pentagon is withdrawing all troops from Afghanistan, the United States has the authority to continue to detain a former Afghan militia member at Guantánamo Bay, Cuba, because of his past association with members of Al Qaeda.
“We remain at war with Al Qaeda,” the lawyer, Stephen M. Elliott, said at the start of hearing in U.S. District Court in Washington in a case brought by Asadullah Haroon Gul, an Afghan citizen who has been held by the U.S. military since 2007.
The hearing was the first in a Guantánamo habeas corpus case since the Biden administration took office, and its defense of his detention appeared identical to the positions taken by previous administrations, despite President Biden’s order to withdraw all U.S. combat troops from Afghanistan and his stated ambition to close the Guantánamo detention operation.
Mr. Elliott said Al Qaeda is “morphing and evolving” and that the U.S. “war on terrorism” continues.
when the militia made peace with the U.S.-allied Afghan government of President Ashraf Ghani. The foreign ministry of Afghanistan has filed a brief in the case seeking his return.
Most of the hearing, expected to last five to eight days, is closed to both the public and the detainee because the substance is considered classified. Mr. Haroon was permitted to listen in on the opening arguments via a phone line from Guantánamo that broke at least once, requiring a lengthy recess.
Before holding a session in open court on Monday, Judge Amit P. Mehta left his bench in Washington, D.C., to preside in a closed portion of the hearing at a secure facility in Virginia, with Mr. Haroon addressing the judge by video.
“I am not a terrorist,” he said in a statement released by his lawyers. “I am an Afghan.”
In the closed portion of the hearings, government lawyers intend to use U.S. intelligence accounts of Mr. Haroon’s interrogations to defend his continuing detention. Mr. Elliott said U.S. intelligence reports linked him to three Qaeda leaders now held at Guantánamo, starting with his attendance at a young age, apparently in the early 1990s, at seminars sponsored by Khalid Shaikh Mohammed, who is accused of being the mastermind of the attacks of Sept. 11, 2001.
Judge Mehta, an appointee of President Barack Obama. Under the current timetable, the court could reopen the hearing for unclassified closing arguments on May 28.