The daily business briefing: November 29, 2022
Biden urges Congress to help prevent rail strike, BlockFi files for bankruptcy in FTX fallout, and more
Biden calls for Congress to intervene to prevent rail strike
President Biden on Monday asked Congress to step in to prevent an economically devastating rail strike. Biden had held off on seeking congressional action as his administration tried to help the freight rail industry and 12 of its unions, representing 115,000 workers, reach a deal, but he said Monday he saw "no path to resolve the dispute at the bargaining table." He wants Congress to impose a tentative contract agreement reached in a bargaining session Labor Secretary Marty Walsh held two months ago. The contract agreement was rejected by members of three of the 12 unions. A strike would disrupt the flow of goods, and interrupt water and power supplies, potentially damaging the broader economy. Without a deal, a strike could hit as early as Dec. 9.
BlockFi files for bankruptcy in fallout from crypto platform FTX's collapse
Struggling crypto firm BlockFi filed for Chapter 11 bankruptcy protection on Monday, becoming the first major casualty of the fallout from the collapse of cryptocurrency exchange FTX. Lender BlockFi was one of several companies FTX bailed out this year. It borrowed $275 million from an FTX subsidiary, and its financial outlook darkened when once-powerful FTX filed for bankruptcy just over two weeks ago. BlockFi earlier halted withdrawals and asked customers not to make deposits, and it said Monday its platform remained "paused." "Rest assured, we will continue to work on recovering all obligations owed to BlockFi as promptly as practicable," the company told customers in a letter.
Stock futures rise after China's COVID crisis fuels Monday losses
U.S. stock futures rebounded Tuesday after Monday's losses as concerns eased about China's COVID-19 lockdowns and the protests they have sparked. Futures tied to the Dow Jones Industrial Average were little changed at 6:30 a.m. ET, but S&P 500 and Nasdaq futures were up 0.3 percent and 0.5 percent, respectively. Uncertainty about China's COVID crisis drove down global stocks on Monday. The Dow and the S&P 500 fell by 1.5 percent, and the tech-heavy Nasdaq dropped 1.6 percent. Domestic oil benchmark West Texas Intermediate crude futures briefly dropped to their lowest level since December as China's lockdowns threatened to reduce global demand. Concerns eased overnight as Beijing reported the first daily decline in new infections in more than a week.
Biden to tout economic agenda in visit to expanding Michigan microchip plant
President Biden is visiting a Bay City, Michigan, semiconductor manufacturing plant that is undergoing a $300 million expansion. The South Korean company that runs the plant, SK Siltron, says the project will help it quadruple production within several years. Biden has been pushing to expand U.S. production of computer chips in response to a global shortage. In August, he signed the CHIPS bill, which includes $52 billion in subsidies and $24 billion in tax credits for the microchip industry. A White House official said Biden also will use the visit to push his broader economic agenda, while also calling attention to falling gas prices and measures that could protect abortion access.
Big banks discussing plan to compensate scammed Zelle users
JPMorgan Chase, Wells Fargo, and other big U.S. banks are working on a plan to compensate customers who have been scammed through their Zelle payment system, The Wall Street Journal reported Monday, citing people familiar with the matter. The banks are discussing policies for issuing refunds to affected account holders, and repaying each other for illegitimate transfers as part of an effort to increase trust in the network, the Journal's sources said. Customers used Zelle, a peer-to-peer payment system jointly owned by the banks, to make 1.8 billion transactions in 2021 totaling $490 billion as the coronavirus pandemic triggered increased use of digital payments. The boom provided an opportunity for scammers posing as customer support to get people to send them money through Zelle.