Officials move to contain U.S. banking crisis
In the early hours of Monday morning, U.S. government officials seized First Republic Bank and then sold it to the country’s biggest bank, JPMorgan Chase. Their action appears, for now, to have quelled nearly two months of turmoil in the banking sector that followed the sudden collapse of Silicon Valley Bank and Signature Bank in early March.
For Jamie Dimon, JPMorgan’s chief executive, it was a reprise of his role in the 2008 financial crisis, when JPMorgan acquired Bear Stearns and Washington Mutual at the behest of federal regulators. But the acquisition has also brought to the fore debates about whether some banks have become too big to fail partly because regulators have allowed or even encouraged them to acquire smaller financial institutions.
JPMorgan is likely to make a lot of money from the acquisition, according to experts. JPMorgan will pay $10.6 billion to acquire First Republic, and the government expects to cover a loss of about $13 billion on First Republic’s assets. JPMorgan said that it expected the deal to raise its profit this year by $500 million.
Context: Normally a bank cannot acquire another bank if doing so would allow it to control more than 10 percent of the nation’s bank deposits — a threshold JPMorgan had already reached before buying First Republic. But the law includes an exception for the acquisition of a failing bank.
An end to the crisis? No other prominent lenders appear to have a similar set of urgent challenges: First Republic had extensive real estate loans that lost value as interest rates rose and a customer base of wealthy depositors who pulled their funds when the bank wobbled.
Russia and Ukraine step up attacks
Russia launched broad aerial assaults yesterday across Ukraine, and Ukraine reported that its pilots had carried out four strikes in Russian-occupied territory on areas where enemy personnel were concentrated. Together, the attacks were a sign of intensifying fighting ahead of an anticipated Ukrainian counteroffensive.
Ukraine’s defense minister, Oleksii Reznikov, said that the country’s military was “reaching the finish line” in preparations to launch a counteroffensive. In response, Russian forces have moved into defensive positions in the south, according to Ukrainian and Western officials. Unusually muddy ground is one obstacle that the Ukrainian military is finding difficult to overcome.
In Pavlograd, in central Ukraine, dozens of buildings were damaged, and at least 34 people, including five children, were wounded, local officials said. In Kyiv and elsewhere, explosions echoed across the predawn landscape as air defenses shot down what the Ukrainian military said were 15 of 18 Russian cruise missiles.
Analysis: Britain’s defense intelligence agency said that Russia had “constructed some of the most extensive systems of military defensive works seen anywhere in the world for many decades,” not only near the front line but also “deep inside areas Russia currently controls.”
Toll: White House officials released new estimates that since December alone, the Russian military had sustained a staggering 20,000 deaths in Ukraine.
The ‘godfather of A.I.’ leaves Google
The A.I. pioneer Geoffrey Hinton, who in 2012 helped create technology that became the foundation for today’s A.I. systems, yesterday joined critics who have said that tech companies are racing toward danger with their aggressive campaign to create products based on generative artificial intelligence, the technology that powers popular chat bots like ChatGPT.
Dr. Hinton said he had quit his job at Google, where he has worked for more than a decade and became one of the most respected voices in the field, so he could freely speak out about the risks of A.I. A part of him, he said, now regrets his life’s work. “It is hard to see how you can prevent the bad actors from using it for bad things,” he said.
The technology industry is perhaps at its most important inflection point in decades. Industry leaders believe the new A.I. systems could be as important as the introduction of the web browser in the early 1990s and could lead to breakthroughs in areas like drug research and education.
Concerns: Since OpenAI released a new version of ChatGPT in March, hundreds of technology leaders and researchers have signed open letters warning of the risks of A.I. or calling for a six-month moratorium on the development of new systems because A.I. technologies pose “profound risks to society and humanity.”
Can A.I. read minds? In a recent experiment, researchers used large language models to translate brain activity into words.
THE LATEST NEWS
Around the World
Meet the South Korean chefs redefining the art of pastry, with boundary-blurring desserts that reflect their Korean background and French training.
“We’re used to having Korean food, and we’re used to learning from Korean moms,” said Bomee Ki. “This is in our mind. Naturally this will come into our food. That makes our food and our place very special.”
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How a pit stop almost turned into a Formula 1 disaster: The F.I.A. has explained the “dangerous situation” that led to Esteban Ocon’s near miss with a group of officials at the Azerbaijan Grand Prix.
Why attendance is booming: The average attendance per game across all four of English soccer’s divisions is 17,826, the highest since 1951-52. Here’s why.
ARTS AND IDEAS
The first Monday in May
Celebrities appeared in droves at New York City’s Metropolitan Museum last night for the Met Gala, fashion’s event of the year, with a guest list hand-selected by Anna Wintour, the editor of U.S. Vogue. Each year, the dress code tracks to the theme of the show — this time around, the career of the Chanel designer Karl Lagerfeld, who died in 2019.
Attendees last night included many of the frequent fliers (Kim Kardashian, Gigi Hadid, Serena Williams), as well as some new names: the W.N.B.A. star and recent Russian detainee Brittney Griner, the musical artist Doja Cat and Paris Hilton, who — perhaps surprisingly — was making her first appearance ever at the event.
Kim Kardashian arrived in pearls, and not much else. Rihanna, above, wore a dramatic bridal gown. Some guests unveiled life changes — Serena Williams is pregnant, and Florence Pugh has shaved her head. And Doja Cat paid homage to Choupette, Lagerfeld’s beloved cat, in a silvery gown with a cat-eared hood, a fluffy white train and a cat-face prosthetic.
