Fed: Stress tests show big banks can withstand a severe recession
The largest banks in the United States are well capitalized and could weather a severe economic downturn, Federal Reserve officials announced Thursday after an annual review of the big banks’ resilience. The tests took on new significance as some economic indicators, like slowing home sales and rising interest rates, appeared to increase the likelihood of a recession in the near future. The Fed tested the 34 largest banks operating in the U.S., looking at how their balance sheets would withstand sharp drops in asset prices and a total of $612 billion in losses. Each bank had enough capital to meet regulators’ minimum requirements.
Netflix lays off 300 more employees
Netflix laid off 300 people Thursday, the second consecutive month that the streaming giant has cut staff as it confronts declining subscriber growth and a falling share price. Last month, Netflix laid off 150 workers, including staff working at Tudum, which was part of the company’s marketing division. In April, the company announced that it had lost 200,000 subscribers, and said it anticipated losing another 2 million in the second quarter of this year. It has nearly 222 million subscribers in total. The company’s stock price, which has fallen about 70% this year, was slightly lower Thursday.
As midterms loom, elections are no longer top priority for Meta CEO
Mark Zuckerberg, Facebook’s CEO, made securing the 2020 U.S. election a top priority. He met regularly with an election team to prevent misinformation from spreading on the social network. The core election team at Facebook, which was renamed Meta last year, has since been dispersed. Safeguarding elections is no longer Zuckerberg’s top concern, said four Meta employees with knowledge of the situation. Instead, he is focused on transforming his company into a provider of the immersive world of the metaverse, which he sees as the next frontier of growth, said the people, who were not authorized to speak publicly.
Instagram tests using AI, other tools for age verification
Instagram is testing new ways to verify the age of people using its service, including a face-scanning artificial intelligence tool, having mutual friends verify their age or uploading an ID. Meta, which owns both Facebook and Instagram, said that beginning on Thursday, if someone tries to edit their date of birth on Instagram from under the age of 18 to 18 or over, they will be required to verify their age using one of these methods. The use of face-scanning AI, especially on teenagers, raised some alarm bells Thursday, given the checkered history of Instagram parent Meta when it comes to protecting users’ privacy.
Government to cancel $6B in student loans for defrauded borrowers
Around 200,000 former students who attended schools that they said had defrauded them will have $6 billion in federal loans canceled under a sweeping settlement announced Wednesday, the latest move by the Biden administration to address the student loan crisis by eliminating some debts. Those who applied for relief will have their loans wiped out if they attended one of more than 150 schools named in the class-action settlement, nearly all of which are for-profit colleges and vocational programs. The deal reverses 128,000 denial notices that were sent to relief applicants during the Trump administration.
Pilots in line for big raises amid global travel disruptions
Pilots at United Airlines are in line to get pay raises over the next 18 months. Their union, the Air Line Pilots Association, said Friday that it has reached a tentative agreement for raises totaling more than 14.5%. The deal would be retroactive the the start of 2022 and run through the end of next year. Rank-and-file pilots will hold a ratification vote through mid-July. If approved, the deal could set the stage for similar raises by pilots at American, Delta and Southwest. Pilots have leverage in contract talks because they are in short supply as travel recovers from the worst of the pandemic.
Fewer Americans file for jobless aid
Fewer Americans applied for jobless benefits last week as the U.S. job market remains robust despite myriad economic pressures, including four-decade high inflation. Applications for jobless aid for the week ending June 18 fell to 229,000, a decline of 2,000 from the previous week, the Labor Department reported Thursday. First-time applications generally mirror the number of layoffs. The four-week average for claims rose by 4,500 from the previous week, to 223,500. The total number of Americans collecting jobless benefits for the week ending June 11 was 1,315,000. That figure has hovered near 50-year lows for months.
Average long-term US mortgage rates inch up to 5.81%
Average long-term U.S. mortgage rates inched up this week following last week’s mammoth jump, the biggest in 35 years. Mortgage buyer Freddie Mac reported Thursday that the 30-year rate ticked up to 5.81% this week, from last week’s 5.78%. Last week’s average was the highest since November of 2008 during the housing crisis. In its ongoing bid to tamp down inflation, the Federal Reserve last week raised its benchmark rate by three-quarters of a point, the biggest single hike since 1994. The Fed’s unusually large rate hike came after government data showed U.S. inflation rose in May to a four-decade high of 8.6%.
By wire sources