(NEW YORK) — FTX’s new chief executive told a bankruptcy court Monday there is “a danger” to authorizing an independent investigation of the crypto exchange’s collapse.
John Ray said he had no use for prior court-supervised investigations into other companies he steered through bankruptcy.
“Neither in Enron nor in Residential Capital did I make use of that report,” Ray testified during a hearing before U.S. Bankruptcy Judge John Dorsey in Delaware. “They’re almost a curated gathering of statements that failed to take real opinions as to what occurred.”
The Enron investigation cost $90 million and the Residential Capital investigation cost $100 million, Ray said, adding that neither was helpful. Ray’s testimony came as the judge considered whether to appoint an examiner in the FTX collapse as requested by the Justice Department.
“This is just too fragile an environment for me to accept yet another seat at the table,” Ray testified. “We’ve come too far to allow that to happen.”
The collapse of FTX spurred criminal charges against its founder, Sam Bankman-Fried, who has pleaded not guilty to eight criminal charges, including fraud and conspiracy.
Ray testified that FTX has furnished 70,000 documents to federal prosecutors, who have asked 156 times for information.
“It’s virtually an ongoing exercise, but the last 90 days have been an extremely intense effort to provide the information the government has requested,” Ray said.
Ray said the company is also working with federal prosecutors in California, New York, Hawaii and Maryland.
FTX has sent confidential messages to political figures, political action funds and other recipients of contributions by Bankman-Fried asking them to return the money by the end of February, the company said in a press release Sunday.
The messages follow an announcement in December that FTX arranged for voluntary return. Otherwise, FTX said in a release Sunday, the company would “reserve the right to commence actions before the Bankruptcy Court to require the return of such payments, with interest accruing from the date any action is commenced.”
Recipients were cautioned that using the money to make a donation to a third party, including a charity, would not prevent FTX from trying to get the money back.
(NEW YORK) — Treasury Secretary Janet Yellen rejected recession fears in an interview with ABC News’ Good Morning America on Monday, saying the economy remains “strong and resilient.”
A blockbuster jobs report last week showed that the economy added 517,000 jobs in January, dropping the unemployment rate to a near-historic low.
“You don’t have a recession when you have 500,000 jobs and the lowest unemployment rate in more than 50 years,” Yellen said.
The remarks from Yellen came a day before President Joe Biden makes his State of the Union Address, when he will likely comment on the nation’s economic outlook amid ongoing inflation.
Four in 10 Americans say they’re worse off financially since Biden became president, according to an ABC News/Washington Post poll released on Sunday. The figure marks the highest share of discontented respondents since the outlets began conducting the poll 37 years ago.
When asked by ABC News’ George Stephanopoulos about persistent economic concern despite a strong jobs market, Yellen said, “The country has been through a lot.”
“With the COVID pandemic and all the stress that placed on the economy, and then Russia’s war in Ukraine that boosted food and energy prices, Americans are concerned about inflation and it’s been President Biden’s top priority to bring it down,” she added.
Consumer prices rose 6.5% over the yearlong period ending in December, which amounts to a significant slowdown from a summer peak but remains more than triple the Federal Reserve’s target of 2%.
Price hikes for some items stand well above the overall inflation rate. The price of eggs has risen 60% over the past year while the cost of flour has risen 23%, government data showed.
The Fed last week imposed the latest in an aggressive string of borrowing cost increases as it tries to slash price hikes by slowing the economy and choking off demand. The approach, however, risks tipping the U.S. economy into a recession.
Legislation enacted during the Biden administration, such as the $369 billion Inflation Reduction Act, has helped the central bank’s effort to slow price increases, Yellen said.
“While the Fed has primary responsibility here, legislation that has been passed in some cases on a bipartisan basis is strengthening our economy and lowering costs for Americans,” she said.
The Inflation Reduction Act will reduce the federal deficit by $238 billion over roughly the next decade, according to the nonpartisan Congressional Budget Office.
Speaking with GMA, Yellen also weighed in on a possible dispute in Congress over raising the nation’s debt limit before it is set to exceed the threshold this summer.
Each year, the U.S. enacts a law that increases the amount of money that the federal government can borrow for past expenditures, ensuring that the nation continues paying creditors what it owes. Failure to reach an agreement would all but ensure a recession, experts previously told ABC News.
Some Republicans in the House have resisted an increase of the debt limit unless Democrats agree to spending cuts. The Biden administration, however, has repeatedly said that it will not negotiate over the debt ceiling.
“America has paid all of its bills on time since 1789, and not to do so would produce an economic and financial catastrophe,” Yellen said. “Every responsible member of Congress must agree to raise the debt ceiling.”
She added, “It’s something that simply can’t be negotiable.”
(NEW YORK) — The job market is booming despite high-profile layoffs at companies like Amazon, Microsoft, Twitter and Goldman Sachs.
The economy added a staggering 517,000 jobs in January, more than double the employment growth a month prior and well above the breakneck pace of some 400,000 monthly jobs added on average last year, according to government data released on Friday.
In turn, the unemployment rate fell to 3.4%, the lowest figure since 1969.
Layoffs at prestigious positions at companies with household names send a shudder through workplaces nationwide but the news doesn’t indicate much about broader job trends, since tech and finance are relatively small sectors with limited ties to the larger economy, labor economists told ABC News.
Perhaps more improbably, the hiring blitz has defied an aggressive series of rate hikes from the Federal Reserve aimed at slowing down the economy and slashing inflation, the experts said. Tech and finance are more sensitive to rate hikes than other sectors.
“Tech is omnipresent in our lives so it feels like it should be omnipresent in our labor market, but that’s not necessarily the case,” Kathryn Edwards, a labor economist and policy consultant, told ABC News.
Sales at top tech firms have retreated from the blistering pace attained during the pandemic, when billions across the world were forced into isolation. Customers stuck at home came to rely on delivery services like e-commerce and virtual connections formed through social media and videoconferencing.
As consumers return to habits that more closely resemble pre-pandemic life, companies have encountered diminished revenue growth and the need to reduce their workforce, Rachel Sederberg, a senior economist at labor analytics firm Lightcast, told ABC News.
“They’re making a course correction to come back to the economic reality that we’re all facing,” she said.
Exacerbating this pain, the tech sector – alongside peers in finance – suffers from more expensive borrowing costs tied to a string of interest rate hikes imposed by the Fed.
The Fed on Wednesday said it was raising its short-term borrowing rate another 0.25%, extending a monthslong effort to cool the economy and dial back inflation.
Interest rate hikes make it more expensive for banks to access money that they in turn lend to companies and households, hurting the finance industry’s profit margins. Also, rate hikes typically hurt the stock market, damaging investor returns.
High interest rates make it more expensive for tech companies to access cheap capital, which they rely upon to fuel early growth, experts said.
“Finance and tech, Silicon Valley and Wall Street, have been hardest hit by the Fed’s interest rate increases but layoffs there are more than offset by an absence of layoffs on Main Street,” Julia Pollak, a labor economist at ZipRecruiter, told ABC News.
Last year, the smallest number of Americans lost their jobs to layoffs and firings of any year since data collection began in 2000, Pollak said, citing government data.
“Layoffs are very, very low,” Pollak said.
Government data released on Friday showed robust hiring in the service sector as pandemic fears continue to wane. Government, health care and retail were also among the sectors spearheading the hiring surge.
The strong hiring owes in part to an excess of job openings when compared to the number of available workers, leaving employers eager to hire whichever workers they can find and hold onto the ones they have, Edwards said.
“We’ve heard employers say for almost two years now that they’ve had a hard time finding workers,” she said. “I wouldn’t be surprised if people see an employee they can get, they will grab it.”
The pandemic brought a surge in early retirement among baby boomers, alongside other factors like long COVID that have prevented some working-age adults from rejoining the job market.
A stock market tear during the pandemic ballooned the assets of some older Americans, allowing them to subsist without income, experts previously told ABC News. Meanwhile, the heightened risk of severe illness faced by older Americans amid the COVID outbreak left them fearful of exposure at the workplace.
“The baby boomer retirement has put a lot of strain on the labor market,” said Sederberg of Lightcast. “I’m not worried about layoffs.”
Despite strong hiring in January, there was no change in the labor force participation rate, a measure of the share of working age adults in the workforce or seeking work, suggesting many Americans remain on the sidelines.
At a press conference on Wednesday, Fed Chair Jerome Powell said there remains a path for bringing inflation down to normal levels without causing a significant rise in unemployment.
In other words, Powell reiterated the possibility of a soft landing, in which the Fed slows the economy and brings down inflation while preventing the U.S. from entering a recession and causing a spike in unemployment.
The jobs report released on Friday suggests the potential for an even more optimistic outcome, Pollak said.
“Now we’re seeing something even more improbable than that soft landing,” she said. “The best case scenario is rather than a small increase in unemployment, we actually see falling unemployment.”
(WASHINGTON) — U.S. employers added 517,000 jobs to their payrolls in January, the latest figures released Friday by the Labor Department show.
The number of jobs added far exceeded what economists had expected and is more than double the amount added in December — 223,000.
The biggest gains in employment last month occurred in leisure and hospitality (128,000), professional and business services (82,000), government (74,000) and health care (58,000).
The unemployment rate, meanwhile, dropped slightly to 3.4%, marking a 50-year low.
(NEW YORK) — When Karissa Warren lost her job as a kitchen manager in December, she worried about how she and her husband would continue to pay off over $10,000 in credit card debt they had accumulated during previous financial rough patches.
Worsening the problem, high inflation had hiked the couple’s everyday costs, including meals for their 3-year-old daughter, said Warren, 31, who lives in Silver Spring, Maryland.
To help pay the bills, she focused on her side job as a baker, but the food prices made it nearly impossible for her to turn a profit, she said.
“The cost of everything is going crazy, especially eggs,” Warren said. “All of the recipes I make have eggs.”
On top of that, interest rates on the couple’s credit card have skyrocketed. Roughly two years ago, Warren and her husband consolidated their debt on a single card, which offered 0% interest for the first year. Then it ticked up to 5%. In recent months, that rate has doubled to 10%, Warren said.
“I’m really upset,” she said. “It’s a pressure every day.”
Warren is one of many Americans battered by a one-two financial punch of elevated inflation, which has sent household expenses soaring; alongside aggressive interest rate hikes, which have spiked credit card rates and interest rates for other loans that help cover the ballooning costs.
The setback could plunge some households into debt for years, as they struggle to make payments that keep up with the rising interest rates, experts said.
The average credit card user carried a balance of $5,805 over the last three months of 2022, research firm TransUnion found. The figure marked an 11% increase from the year prior.
The Fed has put forward a string of borrowing cost increases as it tries to slash price hikes by slowing the economy and choking off demand. That means borrowers face higher costs for everything from car loans to credit card debt to mortgages.
“Because the Fed has been raising rates aggressively over the past year, that really has a direct pass through to your credit card rate,” Ted Rossman, a senior analyst at Bankrate.com who focuses on the credit card industry, told ABC News.
“A lot of people may not have enough income coming in to support day-to-day expenses, so it lands on the credit card,” he added. “That becomes a very persistent cycle of debt, unfortunately.”
The average credit card interest rate offered in the U.S. over the last three months of 2022 stood at 21.6%, according to WalletHub, a jump from 18.2% a year prior.
At the same time, the share of people with ongoing credit card loans has grown. The proportion of credit card users who carry a balance has risen to 46% from 39% a year ago, Bankrate found.
Meanwhile, households looking for relief from high prices have seen an easing of inflation, but price increases remain unusually high.
Consumer prices rose 6.5% over the year-long period ending in December, which amounts to a significant slowdown from a summer peak but remains more than triple the Fed’s target inflation rate of 2%.
Price hikes for some items stand well above the overall inflation rate. The price of eggs has risen 60% over the past year; while the cost of flour has risen 23%, government data showed.
“The fact you’re paying more to fill your cart with groceries, to fill your car with gas — that’s directly leading to more spending and debt,” Rossman said.
Paula Green, 60, a gig worker raising her 14-year-old granddaughter, plunged $4,500 into credit card debt in November after spending thousands on her daughter’s wedding. The interest rate on her card, 13.99%, marked an increase from the rate on the card months before, she said.
Rather than pay the debt off relatively quickly at about $500 a month, Green has committed half as much to paying it down as she weathers inflation, she said.
“It has affected me drastically,” she said. “It has turned my budget on its head.”
The cost of food for Green and her granddaughter has jumped significantly, she said. A 12-pack of diet Coke cost Green $6.99 before the pandemic, she said; now it costs double that.
Green, who has worked freelance since 2009, is training for a customer service job at a cruise line company to find more reliable income as she faces at least two years of credit card debt, she said.
“I don’t think it’s going to calm down anytime soon,” she said.
Despite their debt, Warren and Green remain optimistic.
Warren said she is starting a new job next week that pays more than the one that laid her off. She’s hoping the added income will help her and her husband pay off their credit card debt within two years, and eventually buy a home, she said.
Green, meanwhile, said she has no regrets about going into debt for her daughter’s wedding.
“Both of my parents have a saying: ‘It’s only money, we make more,'” Green said.
Inflation will soften over the coming years, eventually reaching normal levels, experts said. But the easing of prices may require more interest rate hikes, known as monetary tightening, which make borrowing costs and in turn credit card rates even more expensive in the meantime, they added.
“The question is: How much tightening does it take to slow down the economy and bring down inflation?” William English, a former senior Fed economist and finance professor at the Yale School of Management, told ABC News. “It’s very hard to predict.”
(NEW YORK) — Nearly two years ago in June 2021, mom Fran Humphreys got a phone call at work that no parent wants to receive.
“I was called at work and came home to the chaos and the grief,” the nurse recalled to ABC News’ Good Morning America.
Fran Humphreys was told that her 20-year-old daughter Sophia Humphreys had been found unresponsive in bed and died. Later, she and her husband learned that their daughter had allegedly been sold fake Percocet pills through the popular social media app Snapchat.
“Immediately, the law enforcement took her phone,” Fran Humphreys said. “And the detective called us shortly after and said that they were able to see that she had purchased it from a Snapchat dealer.”
Fran Humphreys is just one of 25 families who have sued Snap, Inc, the company behind Snapchat.
“No parent should have to go through this,” Fran Humphreys said.
One lawsuit, filed in Los Angeles by the Social Media Victims Law Center on behalf of 18 plaintiffs, and obtained by ABC News, claims the social media giant “facilitates – and profits from – designing a product that markets and sells lethal drugs to its young users” and accuses it of enabling drug dealers to allegedly sell drugs like fake prescription pills that are laced with fentanyl to minors and young adults.
Matthew Bergman, a founding attorney of Social Media Victims Law Center, told GMA Snapchat is the differentiator in this particular case.
“They all lost a child to fentanyl poisoning through counterfeit drugs obtained through Snap, not through Instagram, not through TikTok, but through Snap,” Bergman claimed. “This isn’t an internet problem. This isn’t a social media problem. This is a Snapchat problem.”
According to the lawsuit, “From 2020 through 2022, Snapchat was involved in over 75 percent of the fentanyl poisoning deaths involving children between the ages of 13 to 18 and involving a dealer who was connected with the child via social media.” The dealers, according to the lawsuit, would sell fatal fentanyl doses that were often counterfeit or disguised as prescription drugs.
Some of Snapchat’s features that set it apart from other apps, like automatically deleted messages, are especially attractive to drug dealers, the lawsuit alleges, making illegal activities harder to track.
Bergman told ABC News the families in the lawsuit hope to see changes to Snapchat, including ending the the disappearing messages feature, improving the detection of and permanent removal of drug dealers from the app, and improving notifications for parents and children of what they call a “clear and present danger” that exists on the app.
In a statement to ABC News, a spokesperson for Snap. Inc. said they could not comment on any active lawsuits but claimed the company was using “cutting-edge technology to … proactively find and shut down drug dealers’ accounts.”
“We block search results for drug-related terms, redirecting Snapchatters to resources from experts about the dangers of fentanyl. We continually expand our support for law enforcement investigations helping them bring dealers to justice, and we work closely with experts to share patterns of dealers’ activities across platforms to more quickly identify and stop illegal behavior,” the statement continued.
They added, “We will continue to do everything we can to tackle this epidemic, including by working with other tech companies, public health agencies, law enforcement, families and nonprofits.”
(WASHINGTON) — The push on Capitol Hill to rein in China-owned social media network TikTok has set its sights on tech giants Apple and Google.
Sen. Michael Bennet, D-CO, sent a letter to Apple CEO Tim Cook and Google CEO Sundar Pichai on Thursday calling on their companies to remove TikTok from their respective app stores, citing concerns about how TikTok handles the data of American users.
“Like most social media networks, TikTok collects vast and sophisticated data from its users,” Bennet said. “Unlike most social media networks, TikTok poses a unique concern.”
“TikTok’s vast influence and aggressive data collection pose a specific threat to U.S. national security because of its parent company’s obligations under Chinese law,” Bennet added.
TikTok, which has more than 100 million monthly active users in the U.S., has faced growing scrutiny from state and federal officials over fears that American data could fall into the possession of the Chinese government.
In December, Congress banned TikTok from all devices owned by the federal government. TikTok CEO Shou Zi Chew is scheduled to appear before the House Energy and Commerce Committee in March on the company’s data security practices, the committee said on Monday.
More than half of U.S. states have taken steps toward a partial or full ban of TikTok on government devices.
The Biden administration and TikTok wrote up a preliminary agreement to address national security concerns posed by the app but obstacles remain in the negotiations, The New York Times reported in September.
TikTok said it stores the data of U.S. users outside of China, and has never removed U.S. posts from the platform at the request of the Chinese government.
In a statement in response to a ban from Maryland Gov. Larry Hogan in December, TikTok told ABC News: “We believe the concerns driving these decisions are largely fueled by misinformation about our company. We are happy to continue having constructive meetings with state policymakers to discuss our privacy and security practices.”
“We are disappointed that many state agencies, offices, and universities will no longer be able to use TikTok to build communities and connect with constituents,” the company added.
Recent news stories have called into question the security of user data.
Buzzfeed reported in June that TikTok engineers based in China gained access to intimate information on U.S. users, such as phone numbers. Forbes reported in October that ByteDance, TikTok’s parent company, intended to use the app to access information on some users.
The Trump administration tried to ban TikTok in 2020, eventually calling on ByteDance to sell the app to a U.S. company. However, the sale never took place.
In his letter on Thursday, Bennet said TikTok poses “an unacceptable threat to the national security of the United States.”
Bennet addressed Cook and Pichai directly: “Given these grave and growing concerns, I ask that you remove TikTok from your respective app stores immediately.”
(NEW YORK) — Conagra Brands is recalling over 2.5 million pounds of canned meat and poultry after a packaging defect that might cause contamination was found, the U.S. Department of Agriculture’s Food Safety and Inspection Service announced Tuesday.
The problem was discovered when a Congra location in Iowa notified FSIS after someone saw spoiled and leaking cans with multiple production dates in a warehouse, the agency said.
“Subsequent investigation by the establishment determined that the cans subject to recall may have been damaged in a manner that is not readily apparent to consumers, which may allow foodborne pathogens to enter the cans,” FSIS said in a statement.
The goods were produced between Dec. 12, 2022, and Jan.13, and shipped to retail locations across the country. The affected products have the establishment number “P4247,” according to the agency.
Customers who have purchased these products are asked not to consume them and to either throw them out or return them to the place of purchase.
Peerapon Boonyakiat/SOPA Images/LightRocket via Getty Images
(NEW YORK) — Depending on where they live, owners of certain Hyundai and Kia models may have a hard time insuring their vehicles due to the cars’ high incidence of theft.
State Farm and Progressive are refusing to insure vehicles in certain states over the rising rate of theft, caused primarily by the absence of technology known as an engine immobilizer – a redundancy system that pairs a vehicle’s key fob to the car’s internal computer. When a drivers insert a key into some cars’ ignition, a chip in the key fob sends a signal to the vehicle, confirming that it is safe to start the engine. If the signal isn’t transmitted, the technology is supposed to “immobilize” the car: the engine won’t start and, in some cases, the steering wheel will lock itself in place.
Certain Hyundai and Kia models manufactured before the 2022 model year didn’t come with immobilizers. According to the Highway Loss and Data Institute, 96% of cars made between 2015 and 2019 had immobilizers as standard equipment, but only 26% of Hyundai and Kia vehicles had them.
Thieves have targeted lower-trim versions of certain Hyundai Motor Group vehicles, such as Hyundai’s Elantra and Santa Fe, and Kia’s Soul, Seltos and Forte vehicles, according to the HLDI..
In recent years, videos posted to social media have explained how to break into the cars and take them for joyrides. According to the videos, something as simple as a USB cable – often already stashed in the car – is all it takes for thieves to start the vehicle.
The thefts have arisen as the Hyundai Motor Group, which comprises Hyundai, Kia and the Genesis luxury brand, is coming off several years of critical and financial success. Kia’s electric SUV, the EV6, was named the North American Utility of the Year for 2023. The Genesis G90, a full-size luxury sedan designed to challenge the Mercedes Benz S-Class and the Lexus LS, recently notched Motor Trend’s Car of the Year award. The magazine also awarded Hyundai’s Ioniq 5 its SUV of the Year prize. According to the International Organization of Motor Vehicle Manufacturers, Hyundai Motors is the third largest automaker in the world in terms of vehicle production, behind only Toyota and Volkswagen.
State Farm calls the thefts a “serious problem” that affects the “entire auto insurance industry.” Progressive did not respond to repeated requests for comment.
In a statement, Hyundai and Kia both say they “regret” insurers’ decision and anticipate it will be temporary. Both companies also say they are working on a software update for affected vehicles, which they are planning to make available by the middle of this year. As of the 2022 model year, all Hyundai and Kia models come standard with engine immobilizers.
(NEW YORK) — The U.S. Department of Labor on Wednesday announced new citations at three more Amazon warehouses — in Aurora, Colorado; Nampa, Idaho; and Castleton, New York -. for failing to keep workers safe.
As part of the enforcement action, the Occupational Safety and Health Administration delivered hazard alert letters for exposing workers to ergonomic hazards.
OSHA cited Amazon for not providing safe workplaces in violation of the Occupational Safety and Heath Act’s “general duty clause.”
The inspections follow referrals from the U.S. Attorney’s Office for the Southern District of New York that led the agency to open inspections and find similar violations at other Amazon warehouse facilities in Florida, Illinois and New York in July 2022. OSHA later opened inspections in Aurora, Nampa and Castleton on Aug. 1, 2022.
At all six locations, OSHA investigators found Amazon exposed warehouse workers to a high risk of low back injuries and other musculoskeletal disorders related to: the high frequency at which workers must lift packages and other items; heavy weight of items handled; employees awkwardly twisting, bending and extending while lifting items; and long hours.
Amazon warehouse workers experienced high rates of musculoskeletal disorders, OSHA said and proposed $46,875 in penalties for the violations at the Aurora, Nampa and Castleton facilities.
“Amazon’s operating methods are creating hazardous work conditions and processes, leading to serious worker injuries,” said Assistant Secretary for Occupational Safety and Health Doug Parker. “They need to take these injuries seriously and implement a company-wide strategy to protect their employees from these well-known and preventable hazards.”
In a statement issued Wednesday, Nicholas Biase, a spokesman for the U.S. Attorney’s office for the Southern District of New York, said: “Together with OSHA, the Civil Division of the SDNY is also investigating potential worker safety hazards at Amazon warehouses across the country, as well as possible fraudulent conduct designed to hide injuries from OSHA and others. “
“We take the safety and health of our employees very seriously, and we don’t believe the government’s allegations reflect the reality of safety at our sites. We’ve cooperated with the government through its investigation and have demonstrated how we work to mitigate risks and keep our people safe, and our publicly available data show we reduced injury rates in the U.S. nearly 15% between 2019 and 2021. We also know there will always be more to do, and we’ll continue working to get better every day,” Kelly Nantel, Amazon spokesperson said in a statement to ABC News.
Biase said the public can report workplace safety and injury-related issues at Amazon warehouses to the SDNY U.S. Attorney’s office.
“Anyone who has information about safety issues — including safety issues related to the pace of work — a failure to report injuries, or inadequate medical care at Amazon’s onsite first-aid center or at a clinic recommended by Amazon, can share that information with SDNY via the following link: https://www.justice.gov/usao-sdny/webform/sdny-amazon-warehouse-investi…,” his statement continued.
In January, OSHA also cited Amazon for failing to furnish a place of employment free from recognized hazards that were causing serious physical harm to employees.
It was the second set of OSHA citations issued after referrals from federal prosecutors in New York who have been investigating workplace complaints.
