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(WASHINGTON) — Senators from both parties slammed former Silicon Valley Bank CEO Greg Becker at a hearing on Tuesday, accusing him of mismanagement that they say was fueled by short-term profits and the millions he stood to gain in compensation.

In a particularly heated exchange, Sen. John Kennedy, R-La., excoriated Becker over the bank’s failure to protect itself against the vulnerability of large holdings in Treasury and mortgage bonds.

As the Fed aggressively raised interest rates over the past year, the spike dropped the value of those bonds and punched a hole in the bank’s balance sheet.

“Mr. Becker, you made a really stupid bet that went bad,” Kennedy said. “You had all of your eggs in one basket.”

In response, Becker cited an “unprecedented” bank run driven by depositor panic on social media that spurred the withdrawal of about $42 billion in a matter of 10 hours.

“This wasn’t unprecedented,” Kennedy said. “Unless you were living on the International Space Station, you could see interest rates were rising and you weren’t hedged.”

In an effort to buffer against the possible decline in the value of a single asset type, banks often acquire other assets called hedges that they expect to perform well in such an environment and offset losses.

Kennedy accused Becker of foregoing the acquisition of hedges because such a move would have cost the bank money, cutting into its profits and reducing Becker’s performance-related compensation.

“If you’d made less money, that would’ve affected your bonus, wouldn’t it?” Kennedy asked Becker.

Becker responded: “Our compensation was predominantly long-term in nature.”

The collapse in March of Silicon Valley Bank, the nation’s 16th largest bank, set off a financial panic that led to the failure two days later of another major lender, Signature Bank.

The financial stress continues to weigh on the banking system. Late last month, regional lender First Republic Bank was seized and sold to JPMorgan Chase after a sudden downfall.

The Federal Reserve released a report last month that sharply criticized leadership at Silicon Valley Bank for “a textbook case of mismanagement,” but the report also faulted the Fed’s lax oversight and an inability to anticipate the systemic threat posed by the bank’s failure.

Michael Barr, the central bank’s vice chair for supervision, is set to testify before the Senate committee on Thursday.

“SVB’s board of directors and management failed to manage the bank’s risk,” Barr plans to tell senators, according to opening testimony filed with the committee. He also plans to fault Fed regulators for failing to adequately assess and respond to the risks posed by the bank.

While defending his management of Silicon Valley Bank, Becker apologized for the harm caused by the failure of the bank.

“I believe SVB had a positive impact on the roughly 100,000 companies we supported over multiple decades,” Becker said.

“The takeover of SVB has been personally and professionally devastating, and I am truly sorry for how this has impacted SVB’s employees, clients, and shareholders,” he added.

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(WASHINGTON) — With time running short, President Joe Biden and congressional leaders will meet Tuesday afternoon to discuss the debt ceiling as Treasury Secretary Janet Yellen stressed a default could trigger a recession.

Biden, House Speaker Kevin McCarthy, House Minority Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell will meet at the White House at 3 p.m.

“We don’t have that much time left. We want to make sure we avoid a default but they’ve got to get serious and they haven’t been serious about any of these negotiations,” McCarthy told ABC News Senior Congressional Correspondent Rachel Scott on Tuesday.

Hours ahead of the summit, Yellen said the economic shock that would result from an unprecedented default “could lead to a recession.”

“It’s essential Congress act as soon as possible,” she said as she delivered remarks in downtown Washington, stating they’re already seeing “the impacts of brinkmanship” and “default would generate an economic catastrophe.”

Yellen has repeatedly warned the U.S. could default in early June, possibly as soon as June 1, though the exact date remains uncertain.

Yellen wrote Monday in a letter to McCarthy the Treasury was already seeing adverse impacts on the economy as negotiations continue — including increased borrowing costs — and more harm could come if lawmakers wait until the final hour to strike a deal.

Schumer also laid out possible consequences of a default.

“If you want to own a home, default would take that dream and run it through the shredder. If you want to protect your 401(k), default would rob you of your livelihood,” Schumer said.

Adding pressure to Tuesday’s debt ceiling sitdown is Biden’s upcoming trip abroad to meet with allies in Japan, Papua New Guinea and Australia. The president is set to depart Wednesday and is expected to be away for approximately a week.

McCarthy on Tuesday appeared to criticize Biden’s schedule, telling ABC he believes “the American public wants to have an American president focused on American problems and solutions.”

Biden said last week skipping the G-7 summit is “possible but not likely” based on debt ceiling negotiations.

“I’m still committed,” he said of the trip. “But obviously this is the single most important thing that is on the agenda.”

White House spokesperson John Kirby said Monday Biden was “still planning to leave as scheduled” for his Indo-Pacific trip.

Biden’s schedule isn’t the only issue as the House is set to be out of town starting May 26 and will return on June 5, while the Senate will be away from May 22 to May 29, according to tentative schedules.

The so-called “Big Five” last met a week ago to talk debt ceiling, a meeting that ended with no movement toward a deal. Staff-level conversations have continued since then between the administration and congressional leaders.

Biden and Democrats have insisted Republicans take default off the table, and separate the debt ceiling from the 2024 budget. Republicans, on the other hand, have said they’ve done their job by passing the Limit, Save, Grow Act last month to raise the debt ceiling and enact deep spending cuts.

Possible areas of agreement on budget talks include clawing back billions of dollars in unspent COVID-19 relief and reforming the permitting process for energy projects, sources familiar with the talks told ABC News.

Schumer said Tuesday the fiscal talks “are separate but simultaneous to our responsibility to avoid default.”

“Democrats will not use the threat of default to get what we want,” Schumer said on the Senate floor. “Nobody should use default as a hostage.”

McConnell, meanwhile, said it’s up to Biden to “pretend the last election didn’t happen or sit down with the speaker and deal responsibly with out nation’s test.”

“Time is of the essence, of the essence. So for the second time, i’ll be glad to sit in at the white house to support speaker McCarthy and to urge President Biden to start operating in reality,” McConnell continued.

Biden said over the weekend he remained “optimistic” both sides be able to come to a solution.

“I really believe there is a desire on their part as well as ours to reach an agreement” he said during a bike ride in Delaware. “I think we’ll be able to do it.”

But McCarthy on Monday downplayed any signs of progress, telling ABC News both sides were “nowhere near coming to a conclusion.”

“I don’t think we’re in a good place,” McCarthy later said during a pro-police press conference. “I know we’re not.”

ABC News’ John Parkinson contributed to this report.

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(NEW YORK) — Billionaire Elon Musk blasted Jeffrey Epstein, who he referred to as a “dumb crook,” after he was subpoenaed as part of a lawsuit filed by the U.S. Virgin Islands against JPMorgan Chase & Co., which officials said “financially profited” from deposits made by Epstein.

In its filing, Virgin Islands officials say they attempted to serve Musk — one of the richest men in the world — with a subpoena. The subpoena appears to seek information about whether Epstein referred or attempted to refer Musk to JPMorgan, according to the Virgin Islands.

“This is idiotic on so many levels,” Musk tweeted Monday night. “1. That cretin never advised me on anything whatsoever. 2. The notion that I would need or listen to financial advice from a dumb crook is absurd. 3. JPM let Tesla down ten years ago, despite having Tesla’s global commercial banking business, which we then withdrew. I have never forgiven them.”

Musk was initially subpoenaed on April 28, but he couldn’t be reached, according to the filing.

The Virgin Islands has asserted the bank should have known about Epstein’s human trafficking and that the investigation it conducted into the matter yielded significant information about the bank’s dealings with Epstein.

“The Government’s investigation has revealed that JPMorgan knowingly, recklessly, and unlawfully provided and pulled the levers through which Epstein’s recruiters and victims were paid and was indispensable to the operation and concealment of the Epstein trafficking enterprise,” the Monday filing said. “Financial institutions can connect—or choke—human trafficking networks, and enforcement actions filed and injunctive relief obtained by attorneys general are essential to ensure that enterprises like Epstein’s cannot flourish in the future.”

The Virgin Islands also asserts that “JPMorgan financially profited from the deposits made by Epstein and Epstein- controlled entities located in the Virgin Islands and from the business opportunities referred to JPMorgan by Epstein and his co-conspirators in exchange for its known facilitation of and implicit participation in Epstein’s sex trafficking venture,” the government added.

Epstein died by suicide at the Metropolitan Correctional Center in Manhattan in August of 2019, the New York City’s medical examiner ruled.

JPMorgan has denied any wrongdoing and in March filed a civil complaint against its former executive Jes Staley, alleging he helped hide Epstein’s sex abuse so he would continue as a client. Staley, who left the bank in 2013, said in an April court filing that JPMorgan is attempting to used him as a “public relations shield” and the bank’s claims have no factual basis.

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(NEW YORK) — Parents on TikTok are spreading the word about Target’s lenient return policy that applies to over 45 of their private label brands, including their children’s clothing line Cat & Jack.

TikTokker Sandra Puente shared a recent shopping trip to Target where she said she returned Cat & Jack items and ended up with about $150 to shop for her child again.

“Why didnt anyone tell me about this policy before,” Puente captioned a May 1 TikTok post.

Target extended their return policy back in 2015 and now lets customers who are not satisfied with any Target-owned brand items to make an exchange or get a refund within one year of purchase and with a receipt.

“This guarantee is in place because of the confidence we have in the quality of what we are offering when guests shop our owned brands,” a Target spokesperson told ABC News.

Hitha Herzog, the chief research analyst at H Squared Research, explained to ABC News’ Good Morning America that retailers like Target may adjust their item pricing in light of more generous return policies.

“What you are originally paying for, the product, that price takes into account the lenient return policy. So whether or not the returns come back gently worn or completely worn in and not wearable, the retailer will take into consideration with that through their pricing,” Herzog said.

Target isn’t the only store with relaxed return policies. Nordstrom famously has “no time limits for returns or exchanges” and the company handles returns “with the ultimate goal of making our customers happy.”

Grocery retailer Trader Joe’s also has a customer-friendly return policy that says, “We tried it. We like it. If you don’t, bring it back for a refund or exchange.”

“When you have a generous return policy, that means the customer will return. The more times a retailer can get that customer to come in, that has a significant impact on revenues going forward,” Herzog said.

Although Target’s return policy is lenient, some on social media are also questioning whether frequent returns are a misuse of Target’s return policy, especially if items have been used and the reason behind a return is solely because a child has outgrown a clothing item.

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(NEW YORK) — Vice Media, the youth-oriented publisher of prominent online outlets such as Vice and Motherboard, filed for bankruptcy on Monday, underscoring the fraught economic environment for digital media companies as economic growth slows and the advertising market softens.

The group of sites, which includes food outlet Munchies and fashion news brand Refinery29, will continue publishing as the Chapter 11 bankruptcy process unfolds and the site takes on new ownership, Vice Media said in a statement.

The bankruptcy announcement will facilitate the sale of Vice Media to a group of its top lenders led by Fortress Investment Group and Soros Fund Management — which has agreed to an acquisition of the company that values it at about $225 million, the statement said.

“This accelerated court-supervised sale process will strengthen the Company and position VICE for long-term growth, thereby safeguarding the kind of authentic journalism and content creation that makes VICE such a trusted brand for young people and such a valued partner to brands, agencies and platforms,” Bruce Dixon and Hozefa Lokhandwala, Vice Media’s co-CEOs, said in a statement.

“We will have new ownership, a simplified capital structure and the ability to operate without the legacy liabilities that have been burdening our business. We look forward to completing the sale process in the next two to three months and charting a healthy and successful next chapter at VICE,” they added.

The move comes weeks after Vice Media canceled its flagship TV program, Vice News Tonight, indicating the depth of layoffs and cost cuts already underway.

A string of layoff and closure announcements in digital media has arrived in response to cooling ad revenue that has punished balance sheets.

Vox Media cut 7% of its staff in January and Bustle Digital Group — the parent company of online media outlets like Bustle and NYLON — followed a month later with layoffs that affected 8% of its workforce.

BuzzFeed News, a brand synonymous with the rise of online news coverage, shuttered less than a month ago.

Founded by Shane Smith, Suroosh Alvi and Gavin McInnes in Montreal in 1994, Vice Media rose from an edgy print magazine to a plucky online news brand to a youth culture media empire, ultimately garnering an investment of more than $400 million from Disney. In 2017, Vice was valued at $5.7 billion.

However, the company fell into financial trouble as it struggled to convert a large readership into reliable digital ad sales, finding cold comfort in a volatile ad market where social media platforms reaped much of the revenue.

Vice Union, a labor organization that represents more than 320 employees at the company, said on Monday that it “stands strong in supporting our members through stressful and uncertain times — and is more than ready to fight tenaciously for our rights.”

“Regardless of who owns the company,” the union added.

Disney is the parent company of ABC News.

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(NEW YORK) — Ex-NBCUniversal advertising executive Linda Yaccarino will take over as CEO of Twitter, Elon Musk said on Friday.

Yaccarino “will focus primarily on business operations, while I focus on product design & new technology,” Musk said.

“Looking forward to working with Linda to transform this platform into X, the everything app,” he added.

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(NEW YORK) — The cryptocurrency industry, in recent months, has suffered some blows: high-profile bankruptcies, the arrest of wunderkind Sam Bankman-Fried and a regulator lawsuit against top crypto exchange Binance.

Despite it all, the price of the largest cryptocurrency, bitcoin, has surged.

Bitcoin has climbed 65% this year, far surpassing the S&P 500, which has jumped 7%. Even the Nasdaq, a tech-heavy index, has delivered just a quarter of bitcoin’s gains.

In fact, bitcoin has benefited from crises in the cryptocurrency arena, analysts said, since the unrest has pushed investors away from lesser-known coins and toward the sector’s household name.

Plus, the price has gained a boost from wider economic forces like trouble in the financial system and slowing interest rate hikes, they said.

But the coming months pose uncertainty, experts added, as a looming recession could test the performance of an asset less than 15 years old.

The blockbuster performance of bitcoin in 2023 comes after the digital currency’s price plummeted last year. In all, the price of bitcoin fell 65% last year, exceeding the losses suffered by the S&P 500, which dropped about 20%.

The price struggles for bitcoin, which extended throughout much of the cryptocurrency sector, coincided with an aggressive series of interest rate hikes that put downward pressure on many assets, including the major stock indexes.

“There had been a big bubble,” James Butterfill, head of research at digital asset management firm CoinShares, told ABC News. “The bubble was pricked by the Fed.”

The distress in cryptocurrency helped trigger a slew of failures. Last May, a major coin, Terra, collapsed along with its sister coin Luna. Meanwhile, several crypto lenders such as Block Fi, Celsius and Genesis filed for bankruptcy last year.

In dramatic fashion, crypto exchange FTX filed for bankruptcy in November after a collapse in a matter of days that was followed by the arrest of Bankman-Fried, the company’s founder and former CEO. Bankman-Fried has pleaded not guilty to all 13 counts he faces, including fraud and conspiracy.

The unrest last year sent crypto investors toward well-known digital currencies, Callie Cox, an analyst at the investment company eToro who tracks cryptocurrencies, told ABC News.

“Bitcoin has been the beneficiary of a flight to quality within the crypto industry,” Cox said. “This is the crypto name that my mom and your family probably know.”

Butterfill, of CoinShares, echoed the point: “People are becoming a lot more discerning. There are 50,000 crypto coins out there and a lot of them are rubbish.”

Ethereum, the world’s second-largest cryptocurrency, has surged 52% this year, benefiting as well from the rush toward prominent coins, Butterfill said.

The rise in the price of bitcoin has coincided with favorable developments across the wider economy, since the Federal Reserve has slowed its interest rate hikes and unrest in the traditional banking sector has pushed some investors to seek a digital alternative, experts said.

Since March, three of the nation’s 30-largest banks have collapsed. Shares of regional lender PacWest Bancorp plummeted on Thursday after the bank said it lost 9% of deposits last week, suggesting that financial instability persists.

“When the banking system faced threats, a lot of investors saw reason to doubt the financial system,” said Cox, of eToro. “They went looking for alternatives.”

There is little data available that depositors pulled money out of banks and placed it in bitcoin, Butterfill noted, adding that he had heard anecdotes of bank customers transferring funds to crypto.

If the Fed halts its rate hikes, as many investors expect, bitcoin could continue its rise over the latter part of the year, experts said. However, they cautioned that a potential recession could bring volatility.

“There might be nervousness about bitcoin as we move closer to a recession,” Cox said, pointing out that interest rates would remain elevated even after a pause. “There are a lot of crosswinds for crypto right now.”

Butterfill acknowledged uncertainty about the outlook of day-to-day performance for bitcoin, but remained optimistic about the remainder of 2023, even if it involves a recession.

“Economic data continues to deteriorate,” Butterfill said. “In that environment, bitcoin would be volatile and perform quite well.”

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(SAN FRANCISCO) — Elon Musk has chosen a new CEO of Twitter and plans to step down from the role within about six weeks, the billionaire entrepreneur said on Thursday.

Musk, who runs Tesla and Space X, did not disclose the identity of the incoming chief executive. He said he plans to transition to a role as executive chairman and chief technology officer, in which he’ll focus on “overseeing product.”

The announcement comes months after Musk pledged in December to step down as the head of Twitter as soon as he found someone “foolish enough to take the job.”

Musk’s tentative resignation late last year followed a Twitter poll posted by Musk in which 57.5% of respondents called on him to stop leading the company.

After acquiring Twitter in October, Musk made major changes to the company and its platform. In an effort to significantly slash costs, the company has cut roughly 75% of its 7,500-person workforce, raising concerns about Twitter’s capacity to maintain its platform.

Twitter suffered a user outage in February that lasted for hours and required an emergency fix, prompting an apology from the company.

Musk has also sought to rejuvenate the platform’s subscription offering as a means of supplementing its advertising revenue. Under Twitter’s new subscription, users gain access to account verification — the site’s signature blue checkmark — for an $8 monthly fee, which amounts to $96 per year.

Previously, Twitter verified celebrities, politicians, journalists and prominent figures on a case-by-case basis in an effort to authenticate their identities and prevent impersonation.

Twitter partially reversed the subscription change last month by reverifying some legacy accounts, including accounts affiliated with basketball star Lebron James and author Stephen King.

Musk has defended his actions at Twitter as part of an aggressive effort to rescue the company from financial peril, which he described in a Twitter Spaces interview in December as an “emergency fire drill.”

This is a developing story. Please check back for updates.

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(NEW YORK) — Shares of PacWest Bancorp plummeted more than 20% in early trading on Thursday after the regional lender said it faced a sizable withdrawal of deposits last week, renewing concern over financial trouble in the aftermath of a string of major bank collapses.

The sharp decline of PacWest stock prompted a pause in trading of the company’s shares minutes after the market opened on Thursday morning, but trading later resumed.

PacWest said in a securities filing on Thursday that the bank lost 9.5% of deposits last week, marking a turnabout after the company said at the outset of this month that deposits remained stable.

While noting the deposit flight, PacWest said that as of Wednesday it retained $15 billion in immediately-available cash if needed to fulfill further withdrawals. The liquidity far exceeds total uninsured deposits, which amount to $5.2 billion, the bank said.

PacWest did not immediately respond to ABC News’ request for comment on the stock decline.

The Los Angeles-based midsized lender said last week that it is exploring “all options” as it weighs offers from potential investors as well as the sale of a $2.7 billion loan portfolio.

In the statement last week, the company rejected concern about a sudden run on deposits, saying it had “not experienced out-of-the-ordinary deposit flows” after the seizure and sale of First Republic two days prior.

The significant withdrawal of deposits mostly took place in the days following the announcement last week, PacWest said on Thursday.

In all, PacWest stock has fallen more than 80% this year, erasing hundreds of millions of dollars in value.

The financial distress at PacWest follows the collapse within weeks of three of the nation’s 30-largest banks.

As the Fed aggressively hiked interest rates over the past year, the value of long-term Treasury and mortgage bonds dropped, punching a hole in the balance sheets at some regional banks.

The failure of Silicon Valley Bank in March sent shockwaves through the financial system that days later helped bring down New York City-based Signature Bank. Last Monday, First Republic fell under government control before a sale to JPMorgan Chase.

While high interest rates contributed to the collapses, each of the banks also retained a sizable portion of uninsured depositors, who tend to panic without a government backstop for their funds.

Addressing concern about deposits that lack government protection, PacWest said last week that insured deposits make up 75% of its holdings, which marks a sharp increase from the end of last year, when just 48% of its deposits were insured.

Stock prices at some other regional banks held steady or increased in early trading on Thursday, suggesting that the financial fallout remained limited to PacWest. Phoenix-based Western Alliance Bancorp shares rose about 5%; while Salt Lake City-based Zions Bancorp inched down less than 1%.

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(NEW YORK) — Peloton is recalling over two million bikes, warning that the bike seat post assembly could break and cause users to fall.

The Peloton Bikes Model PL01 is the one being recalled. Users are told to immediately stop using the bike and call Peloton for a free repair.

There have been 35 reports of people falling off their bikes with 13 injuries, according to the Consumer Product Safety Commission.

Story developing…

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