Good morning. Andrew here. Is artificial intelligence going to make banks vulnerable to cyberattacks? That’s what appears to be worrying Treasury Secretary Scott Bessent and Fed Chair Jay Powell. We go behind the scenes of a meeting with bank C.E.O.s. And oil prices are under pressure again with talks expected to take place this weekend about the war in Iran. (Was this newsletter forwarded to you? Sign up here.)
A.I. as systemic financial riskAnthropic made waves this week when it announced its latest artificial intelligence model — but restricted its use to a few dozen companies to search for and patch up critical cybersecurity flaws in their infrastructure. Some skeptics called the move fearmongering or marketing. But reports that top U.S. financial regulators convened the heads of major banks to discuss the risks of the model underscored real-world concerns about ever more capable A.I. The news: Treasury Secretary Scott Bessent and Jay Powell, the Fed chair, summoned several Wall Street chiefs on short notice Tuesday to discuss Anthropic’s model, named Claude Mythos Preview, Bloomberg reported. On the agenda was ensuring that the banks were aware of the cybersecurity risks that Mythos and similar A.I. models in the future could pose — and that the banks were safeguarding against them. Among those asked to attend: Brian Moynihan of Bank of America, Jane Fraser of Citigroup, David Solomon of Goldman Sachs, Ted Pick of Morgan Stanley and Charlie Scharf of Wells Fargo. All were already in Washington for a meeting of an industry lobbying group, The Financial Times said. Jamie Dimon of JPMorgan Chase was unable to attend, according to Bloomberg, but JPMorgan already has access to Mythos. Corporate leaders and policy experts have already warned about smarter A.I.:
Bessent and Powell aren’t the only government officials worried about A.I. Yesterday, Florida’s attorney general, James Uthmeier, announced that he had begun an investigation into OpenAI and ChatGPT’s potential for harm. (Court documents suggested that the suspect in a mass shooting at Florida State University last year may have sought the chatbot’s help in planning an attack.) Tuesday’s meeting highlights Anthropic’s complex relationship with Washington. The A.I. company said it had been “in ongoing discussions with U.S. government officials” about Mythos’s capabilities and risks. Yet the Trump administration has also sought to declare Anthropic a supply chain risk and bar its use by both government agencies and contractors, which Anthropic is fighting in federal court.
Melania Trump denies links with Jeffrey Epstein. At an unscheduled news conference yesterday, the first lady said that she had no relationship with Epstein, the convicted sex offender, was not a victim of his and had no knowledge of his crimes. She also called on Congress to hold a public hearing for Epstein victims, even as President Trump has called the scandal a “hoax” pushed by Democrats. SpaceX is said to have lost $5 billion last year. Driving the red ink at Elon Musk’s company was $13 billion in spending on processors and data centers for its xAI division, according to The Information. SpaceX’s core rocket and satellite internet business collected nearly $8 billion in pro forma earnings. Over all, it generated more than $18.5 billion in revenue. The financials help illustrate the scale of SpaceX’s business, and its challenges, as the company prepares to go public. Apple plans to close its first unionized store in the U.S. The iPhone maker will shut its store in Towson, Md. in June, citing the “departure of several retailers and declining conditions” in the mall where it’s located. Citing its collective bargaining agreement with workers there, Apple said it couldn’t offer to transfer them to nearby locations. The union representing employees called the decision an attempt at union-busting. Hormuz headacheThe S&P 500 is on a seven-day winning streak and close to recouping all its losses since the war in the Middle East began in February. But oil prices have been under pressure amid questions about the Strait of Hormuz, an important transitway for the world’s oil and gas shipments. That is causing some anxiety about inflation, ahead of today’s release of U.S. economic data that’s expected to show the conflict driving up prices. The latest:
The stock market optimism belies growing uncertainty on the outcome of peace talks, scheduled to kick off in Pakistan tomorrow. The fate of those negotiations may hinge in large part on whether Iran ends its virtual blockade of the strait, an issue vexing political and business leaders worldwide. “Iran is doing a very poor job, dishonorable some would say, of allowing Oil to go through the Strait of Hormuz. That is not the agreement we have!,” President Trump wrote on social media last night. Hours earlier, Trump wrote that he was “very optimistic” about reaching a peace deal with Iran. Iran’s demand for hefty tolls from Hormuz traffic continues to draw outrage. Gulf countries, oil executives and the shipping industry have all protested Tehran’s plan, which amounts to about a $1 surcharge per barrel of oil. They argue that the levies would violate international laws and could run afoul of U.S. sanctions against Iran. Trump has sent mixed messages on the issue. He first suggested that the U.S. could join Iran in a toll scheme. But yesterday he warned that Iran “better stop now!” Some economists suggest tolls might be acceptable — to restore trade to prewar levels. Over time, the payments would be mostly borne by Gulf-region exporters with just a small portion by global consumers, argues Guntram Wolff, a senior fellow at Bruegel, a European think tank. If the war drags on, those countries might acquiesce to the Iran plan if it meant fully reopening the strait and avoiding an economic “disaster for the Gulf,” he told DealBook. Wolff acknowledged that allowing tolls risks legitimizing “Iran’s coercion and sets a precedent under international law that other regimes may want to pursue.” But, he added, the war has already led to so many hits to the global economy that the idea could draw serious consideration if it means avoiding even worse outcomes. Who might benefit from the N.F.L. antitrust inquiry?A new Justice Department investigation could upend the decades-old balance of power between the N.F.L. and media giants like Fox and ABC that have grown increasingly reliant on profitable football broadcasts. The inquiry focuses on whether the N.F.L. has engaged in anticompetitive strategies that harm consumers, two people familiar with the matter told Lauren Hirsch and Ken Belson. Media partners pay about $11 billion a year for the broadcast rights. Competition with deep-pocketed streaming services is expected to drive those fees even higher. The N.F.L., which last season drew its biggest television audiences since 1989, began discussions after the Super Bowl in February to reopen its broadcast and streaming contracts. Those agreements run through the early 2030s, but the league believes they are undervalued; industry analysts say a renegotiation could raise fees by as much as 50 percent. At issue is the Sports Broadcasting Act. The 1961 law granted the N.F.L. a limited antitrust immunity to negotiate broadcasting deals on behalf of all of its teams. While the act was written with free broadcast networks in mind, the N.F.L. has for decades struck rights deals with pay cable broadcasters like ESPN and, more recently, subscription streaming companies like Amazon and Netflix. What fans need to shell out — as much as $1,500 to stream every game last season — has become an increasingly political issue. Some lawmakers, along with the F.C.C. Chair Brendan Carr, have questioned the N.F.L.’s antitrust protection, given efforts to move more games to pay services. What now? Should the N.F.L. lose its antitrust exemption, it’s not clear how future deals would be brokered. But any shift in power away from the league could mean less-heated bidding for broadcast rights. The N.F.L. defended its media model yesterday as the “most fan and broadcaster-friendly in the entire sports and entertainment industry.” It added that more than 87 percent of games were shown on free channels.
Talking A.I. with the C.E.O. of AXAEvery week, we’re asking a leader how he or she uses artificial intelligence. This week, Thomas Buberl, who heads the Paris-based global insurance company AXA, told Sarah Kessler that he prioritizes maintaining trust with employees. The interview has been edited and condensed. How are you personally using A.I.? I used to use Google. Now I use A.I. What have you told your employees about how you want them to use A.I.? A.I. represents a tech challenge, but it really represents a leadership challenge. We work with AXA’s European works council (a sort of in-house union) to remind them that this is not the first time we are transforming the company. We’ve always found a way in managing this responsibly without upsetting anybody, and we want to do the same again. What does that kind of management look like? More than a decade ago I ran AXA’s German operation. At the time we had 16 sites there and the works council didn’t want me to close any. I negotiated to specialize each site in one task only. So somebody who did accounts payable had to do claims management, which meant we had to re-skill people. It was not easy to see that somebody at age 50 had to relearn their profession again from zero. We said, look, if you do one claim a day, it’s fine. Get into the saddle. Then we can go back to normal. When we think about A.I., it would be the same. People will be doing different jobs and we need to help them. How does taking that approach benefit the company? I’m extremely convinced that, yes, this requires a lot of change leadership. But have patience, because you will have the upside afterward, as opposed to doing brutal restructuring, firing people and completely destroying the trust and culture of a company. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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