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California court rules for Uber, Lyft in ride-hailing case
App-based ride hailing and delivery companies like Uber and Lyft can continue to treat their California drivers as independent contractors, a state appeals court ruled Monday, allowing the tech giants to bypass other state laws requiring worker protections and benefits.
The ruling mostly upholds a voter-approved law, called Proposition 22, that said drivers for companies like Uber and Lyft are independent contractors and are not entitled to benefits like paid sick leave and unemployment insurance. A lower court ruling in 2021 had said Proposition 22 was illegal, but Monday’s ruling reversed that decision.
“Today’s ruling is a victory for app-based workers and the millions of Californians who voted for Prop 22,” said Tony West, Uber’s chief legal officer. ”We’re pleased that the court respected the will of the people.”
The ruling is a defeat for labor unions and their allies in the state Legislature who passed a law in 2019 requiring companies like Uber and Lyft to treat their drivers as employees.
“Today the Appeals Court chose to stand with powerful corporations over working people, allowing companies to buy their way out of our state’s labor laws and undermine our state constitution,” said Lorena Gonzalez Fletcher, leader of the California Labor Federation and a former state assemblywoman who authored the 2019 law. “Our system is broken. It would be an understatement to say we are disappointed by this decision.”
READ: Does Uber in Bangladesh offer hassle-free service?
The ruling wasn’t a complete defeat for labor unions, as the court ruled the companies could not stop their drivers from joining a labor union and collectively bargain for better working conditions, said Mike Robinson, one of the drivers who filed the lawsuit challenging Proposition 22.
“Our right to join together and bargain collectively creates a clear path for drivers and delivery workers to hold giant gig corporations accountable,” he said. “But make no mistake, we still believe Prop 22 — in its entirety — is an unconstitutional attack on our basic rights.”
The California Legislature passed a law in 2019 that changed the rules of who is an employee and who is an independent contractor. It’s an important distinction for companies because employees are covered by a broad range of labor laws that guarantee them certain benefits while independent contractors are not.
While the law applied to lots of industries, it had the biggest impact on app-based ride hailing and delivery companies. Their business relies on contracting with people to use their own cars to give people rides and make deliveries. Under the 2019 law, companies would have to treat those drivers as employees and provide certain benefits that would greatly increase the businesses’ expenses.
In November 2020, voters agreed to exempt app-based ride hailing and delivery companies from the 2019 law by approving a ballot proposition. The proposition included “alternative benefits” for drivers, including a guaranteed minimum wage and subsidies for health insurance if they average 25 hours of work a week. Companies like Uber, Lyft and DoorDash spent $200 million on a campaign to make sure it would pass.
Three drivers and the Service Employees International Union sued, arguing the ballot proposition was illegal in part because it limited the state Legislature’s authority to change the law or pass laws about workers’ compensation programs. In 2021, a state judge agreed with them and ruled companies like Uber and Lyft were not exempt.
Monday, a state appeals court reversed that decision, allowing the companies to continue to treat their drivers as independent contractors.
The ruling might not be the final decision. The Service Employees International Union could still appeal the decision to the California Supreme Court, which could decide to hear the case.
“We will consider all those options as we decide how to ensure we continue fighting for these workers,” said Tia Orr, executive director of SEIU California.
8 dead after smuggling boats capsize off San Diego coast
At least eight people were killed when two migrant smuggling boats capsized in shallow but treacherous surf amid heavy fog, authorities said Sunday, marking one of the deadliest maritime human smuggling operations ever off of U.S. shores.
A Spanish-speaking woman on one of the panga-style boats called 911 Saturday night to report the other vessel overturned in waves at Black's Beach, authorities said. She said there were 15 people on the capsized vessel and eight on hers.
Coast Guard and San Diego Fire-Rescue crews pulled bodies of eight adults from the water, but fog hampered the search for additional victims. Recovery efforts resumed Sunday but no additional bodies were found.
Survivors may have escaped on land, including the woman who called 911. Authorities did not know her whereabouts.
San Diego Lifeguard Chief James Gartland said rescuers found the two boats overturned in shallow waters when they arrived. Surf was modest, with swells around 3 feet (1 meter), but skies were foggy and black.
“That area is very hazardous, even in the daytime," Gartland said at a news conference. "It has a series of sandbars and in-shore rip currents, so you can think that you can land in some sand or get to waist-high, knee-high water and think that you’re able to be safe to exit the water, but there’s long, in-shore holes. If you step into those holes, those rip currents will pull you along the shore and back out to sea.”
Black's Beach is about 15 miles (24 kilometers) north of downtown San Diego in a secluded area not far from the popular La Jolla Shores. Its reputation for some of the best breaks in Southern California draws many surfers.
Hundreds of maritime smuggling operations occur every year off California's coast and sometimes turn fatal. In May 2021, a packed boat carrying migrants capsized and broke apart in powerful surf along the rocky San Diego coast, killing three people and injuring more than two dozen others.
Smuggling off the California coast has ebbed and flowed over the years but has long been a risky alternative for migrants to avoid heavily guarded land borders. Pangas enter from Mexico in the dead of night, sometimes charting hundreds of miles north. Recreational boats try to mix in unnoticed with fishing and pleasure vessels during the day.
South of the U.S. border, there are many secluded, private beaches with gated entrances between high-rises with magnificent ocean views, some only partially built because funds dried up during construction. Popotla, a fishing hamlet where narrow streets are lined with vendors selling a wide variety of local catch, is favored among smugglers for its large, sandy beach and relatively gentle waves.
At least some of Saturday's victims were Mexican, according to the consulate in San Diego, but how many was unknown. Illegal crossings have soared under President Joe Biden, with many migrants turning themselves in to Border Patrol agents and being released in the United States to pursue their cases in immigration court.
A pandemic rule scheduled to end May 11 denies migrants a chance to seek asylum on grounds of preventing the spread of COVID-19 but enforcement has fallen disproportionately on Mexicans, Hondurans, Guatemalans and El Salvadorans because those have been the only nationalities that Mexico agreed to take back.
As a result, people of those four countries have been more likely to try to elude capture, knowing they are likely to be expelled under the public health rule, known as Title 42 authority. Mexico recently began taking back Cubans, Haitians, Nicaraguans and Venezuelans under Title 42.
As Biden weighs Willow, he blocks other Alaska oil drilling
As President Joe Biden prepares a final decision on the huge Willow oil project in Alaska, his administration announced he will prevent or limit oil drilling in 16 million acres in Alaska and the Arctic Ocean.
Plans announced Sunday night will bar drilling in nearly 3 million acres of the Beaufort Sea — closing it off from oil exploration — and limit drilling in more than 13 million acres in a vast swath of land known as the National Petroleum Reserve - Alaska.
The moves come as regulators prepare to announce a final decision on t he $8 billion Willow project, a controversial oil drilling plan pushed by ConocoPhillips in the petroleum reserve. Climate activists have rallied against project, calling it a “carbon bomb” that would be a betrayal of Biden's campaign pledges to curb new oil and gas drilling.
Also Read: Oil giant Saudi Aramco has profits of $161B in 2022
Meanwhile, Alaska lawmakers, unions and indigenous communities have pressured Biden to approve the project, saying it would bring much-needed jobs and billions of dollars in taxes and mitigation funds to the vast, snow- and ice-covered region nearly 600 miles (965 kilometers) from Anchorage. Sen. Dan Sullivan, R-Alaska, called Willow “one of the biggest, most important resource development projects in our state’s history.”
Biden’s decision on Willow will be one of his most consequential climate decisions and comes as he gears up for a likely reelection bid in 2024. A decision to approve Willow risks alienating young voters who have urged stronger climate action by the White House and flooded social media with demands to stop the Willow project. Approval also could spark protests similar to those against the failed Keystone XL oil pipeline during the Obama administration.
Rejection of the project would meet strong resistance from Alaska’s bipartisan congressional delegation, which met with top officials at the White House in recent days to lobby for the project. Republican Sen. Lisa Murkowski, who provided key support to confirm Interior Secretary Deb Haaland, said it was no secret she has cooperated with the White House on a range of issues.
“Cooperation goes both ways,″ she told reporters.
Haaland, who fought the Willow project as a member of Congress, has the final decision on whether to approve it, although top White House climate officials are likely to be involved, with input from Biden himself. The White House said no final decision on Willow has been reached.
Under the conservation plan announced Sunday, Biden will bar drilling in nearly 3 million acres of the Arctic Ocean, and impose new protections in the petroleum reserve.
The withdrawal of the offshore area ensures that important habitat for whales, seals, polar bears and other wildlife "will be protected in perpetuity from extractive development,'' the White House said in a statement.
The action completes protections for the entire Beaufort Sea Planning Area, building upon President Barack Obama’s 2016 withdrawal of the Chukchi Sea Planning Area and the majority of the Beaufort Sea, the White House said.
Separately, the administration moved to protect more than 13 million acres within the petroleum reserve, a 23-million acre chunk of land on Alaska’s North Slope set aside a century ago for future oil production.
The proposed Willow project is within the reserve, and ConocoPhillips has long held leases for the site. About half the reserve is off limits to oil and gas leasing under an Obama-era rule reinstated by the Biden administration last year.
Areas to be protected include the Teshekpuk Lake, Utukok Uplands, Colville River, Kasegaluk Lagoon and Peard Bay Special Areas, collectively known for their globally significant habitat for grizzly and polar bears, caribou and hundreds of thousands of migratory birds.
Abigail Dillen, president of the environmental group Earthjustice, welcomed the new conservation plan, but said if the Biden administration believes it has authority to limit oil development in the petroleum reserve, officials should extend those protections to the Willow site.
"They have the authority to block Willow,'' she said in an interview Sunday.
Athan Manuel, director of the Sierra Club's lands protection program, said the benefits of the new protections would be more than undone by damage from Willow, which would be the biggest new oil field in decades in Alaska, producing up to 180,000 barrels per day, according to ConocoPhillips.
“No proposal poses a bigger threat to lands, wildlife, communities and our climate than ConocoPhillips’ Willow project,'' Manuel said in a statement. "Oil and gas leasing on public lands and waters must end — full stop. The eyes of the world are watching to see whether this administration will live up to its climate promises.''
In 2015, President Barack Obama halted exploration in coastal areas of the Beaufort and Chukchi seas, and he later withdrew most other potential Arctic Ocean lease areas — about 98 percent of the Arctic outer continental shelf. The bans were intended to protect polar bears, walruses, ice seals and Alaska Native villages that depend on the animals.
President Donald Trump reversed Obama's decision, but a federal judge restored the Obama-era restrictions in 2019, ruling that Trump exceeded his authority.
The Biden administration received one bid in December for the right to drill offshore for oil and gas in Alaska’s Cook Inlet.
US turns to new ways to punish Russian oligarchs for the war
The U.S. has begun an aggressive new push to inflict pain on Russia’s economy and specifically its oligarchs with the intent of thwarting the Kremlin’s invasion of Ukraine.
From the Treasury Department to the Justice Department, U.S. officials will focus on efforts to legally liquidate the property of Russian oligarchs, expand financial penalties on those who facilitate the evasion of sanctions, and close loopholes in the law that allow oligarchs to use shell companies to move through the U.S. financial system.
Andrew Adams, who heads the KleptoCapture task force, designed to enforce the economic restrictions within the U.S. imposed on Russia and its billionaires, told The Associated Press that the group is prioritizing its efforts to identify those who help Russians evade sanctions and violate export controls.
“These illicit procurement networks will continue to take up an ever-increasing amount of our bandwidth,” said Adams, who also serves as acting deputy assistant attorney general.
So far, more than $58 billion worth of sanctioned Russians’ assets have been blocked or frozen worldwide, according to a report last week from the Treasury Department. That includes two luxury yachts each worth $300 million in San Diego and Fiji, and six New York and Florida properties worth $75 million owned by sanctioned oligarch Viktor Vekselberg.
Also Read: US government moves to stop potential banking crisis
The U.S. has begun attempts to punish the associates and wealth managers of oligarchs — in Vekselberg's case, a federal court in New York indicted Vladimir Voronchenko after he helped maintain Vekselberg’s properties. He was charged in February with conspiring to violate and evade U.S. sanctions.
The case was coordinated through the KleptoCapture group.
“I think it can be quite effective to be sanctioning facilitators,” Adams said, calling them “professional sanctions evasion brokers.”
A February study led by Dartmouth University researchers showed that targeting a few key wealth managers would cause far greater damage to Russia than sanctioning oligarchs individually.
Other attempts to inflict pain on the Russian economy will come from the efforts to liquidate yachts and other property owned by Russian oligarchs and the Kremlin, turning them into cash to benefit Ukraine.
Ukrainian President Volodymyr Zelenskyy has long called for Russian assets to be transferred to Ukraine, and former Biden administration official Daleep Singh told the Senate Banking Committee on Feb. 28 that forfeiting Russia's billions in assets held by the U.S. is “something we ought to pursue.”
Singh suggested the U.S. should “use the reserves that we have immobilized at the New York Fed, transfer them to Ukraine and allow them to put them up as collateral to raise money.” He ran the White House's Russia sanctions program when he was national security adviser for international economics.
Adams said the KleptoCapture task force is pursuing efforts to sell Russians' yachts and other property, despite the legal difficulties of turning property whose owners' access has been blocked into forfeited assets that the government can take and sell for the benefit of Ukraine.
He stressed that the U.S. will operate under the rule of law. “Part of what that means is that we will not take assets that are not fully, totally forfeited through the judicial procedures and begin confiscating them without a legal basis,” Adams said.
He added that the task force has had “success in working with Congress and working with folks around the executive branch in obtaining authorization to transfer certain forfeited funds to the State Department.”
The Treasury Department said on Thursday that the government is “paving the way” for $5.4 million in seized funds to be sent as foreign assistance to Ukraine.
Additionally, strengthening laws that serve as loopholes for sanctions evaders will also be a priority across federal departments, officials say.
The Financial Crimes Enforcement Network, under Treasury, is expected to roll out rules to address the use of the U.S. real estate market to launder money, including a requirement on disclosing the true ownership of real estate.
Steven Tian, director of research at the Yale Chief Executive Leadership Institute, who tracks companies' disengagement from Russia, said the new real estate rule is long overdue.
“I would point out that it’s not just unique to Russian oligarchs. As you know, the real estate market makes use of shell companies in the United States, period," Tian said.
Erica Hanichak, the government affairs director at the FACT Coalition, a nonprofit that promotes corporate transparency, urged the administration to put the rule forward by late March, when the U.S. co-hosts the second Summit for Democracy with the governments of Costa Rica, Netherlands, South Korea and Zambia.
“We’re viewing this as an opportunity for the United States to demonstrate leadership not only in addressing corrupt practices abroad, but looking to our own backyard and addressing the loopholes in our system that facilitate corruption internationally," she said.
4 dead in shooting at Dallas apartment building
A news report said four people died in a Sunday night shooting at a Dallas apartment building.
WFAA-TV reported police have confirmed officers were called for a report of a shooting around 7:10 p.m. in the Northwest Dallas area.
The station reported police said four people were discovered with gunshot wounds and all of the victims died at the scene. No information on the victims was immediately available.
Police said there was no perceived threat to the public, WFAA reported.
US government moves to stop potential banking crisis
The U.S. government took extraordinary steps Sunday to stop a potential banking crisis after the historic failure of Silicon Valley Bank, assuring all depositors at the failed institution that they could access all their money quickly, even as another major bank was shut down.
The announcement came amid fears that the factors that caused the Santa Clara, California-based bank to fail could spread. Regulators had worked all weekend to try to find a buyer for the bank, which was the second-largest bank failure in history. Those efforts appeared to have failed Sunday.
In a sign of how fast the financial bleeding was occurring, regulators announced that New York-based Signature Bank had also failed and was being seized on Sunday. At more than $110 billion in assets, Signature Bank is the third-largest bank failure in U.S. history.
Also Read: A major bank failed. Here’s why it’s not 2008 again
The near-financial crisis that U.S. regulators had to intervene to prevent left Asian markets jittery as trading began Monday. Japan’s benchmark Nikkei 225 sank 1.6% in morning trading, Australia’s S&P/ASX 200 lost 0.3% and South Korea’s Kospi shed 0.4%. But Hong Kong’s Hang Seng rose 1.4% and the Shanghai Composite increased 0.3%.
In an effort to shore up confidence in the banking system, the Treasury Department, Federal Reserve and FDIC said Sunday that all Silicon Valley Bank clients would be protected and able to access their money. They also announced steps that are intended to protect the bank’s customers and prevent additional bank runs.
“This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the agencies said in a joint statement.
Under the plan, depositors at Silicon Valley Bank and Signature Bank, including those whose holdings exceed the $250,000 insurance limit, will be able to access their money on Monday.
Also Sunday, another beleaguered bank, First Republic Bank, announced that it had bolstered its financial health by gaining access to funding from the Fed and JPMorgan Chase.
In a separate announcement, the Fed late Sunday announced an expansive emergency lending program that's intended to prevent a wave of bank runs that would threaten the stability of the banking system and the economy as a whole. Fed officials characterized the program as akin to what central banks have done for decades: Lend freely to the banking system so that customers would be confident that they could access their accounts whenever needed.
The lending facility will allow banks that need to raise cash to pay depositors to borrow that money from the Fed, rather than having to sell Treasuries and other securities to raise the money. Silicon Valley Bank had been forced to dump some of its Treasuries at at a loss to fund its customers’ withdrawals. Under the Fed’s new program, banks can post those securities as collateral and borrow from the emergency facility.
The Treasury has set aside $25 billion to offset any losses incurred under the Fed’s emergency lending facility. Fed officials said, however, that they do not expect to have to use any of that money, given that the securities posted as collateral have a very low risk of default.
Analysts said the Fed’s program should be enough to calm financial markets on Monday.
“Monday will surely be a stressful day for many in the regional banking sector, but today’s action dramatically reduces the risk of further contagion,” economists at Jefferies, an investment bank, said in a research note.
Though Sunday's steps marked the most extensive government intervention in the banking system since the 2008 financial crisis, its actions are relatively limited compared with what was done 15 years ago. The two failed banks themselves have not been rescued, and taxpayer money has not been provided to the banks.
President Joe Biden said Sunday evening as he boarded Air Force One back to Washington that he would speak about the bank situation on Monday. In a statement, Biden also said he was “firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”
Regulators had to rush to close Silicon Valley Bank, a financial institution with more than $200 billion in assets, on Friday when it experienced a traditional run on the bank where depositors rushed to withdraw their funds all at once. It is the second-largest bank failure in U.S. history, behind only the 2008 failure of Washington Mutual.
Some prominent Silicon Valley executives feared that if Washington didn’t rescue the failed bank, customers would make runs on other financial institutions in the coming days. Stock prices plunged over the last few days at other banks that cater to technology companies, including First Republic Bank and PacWest Bank.
Among the bank's customers are a range of companies from California’s wine industry, where many wineries rely on Silicon Valley Bank for loans, and technology startups devoted to combating climate change. Sunrun, which sells and leases solar energy systems, had less than $80 million of cash deposits with Silicon Valley. Stitchfix, the clothing retail website, disclosed recently that it had a credit line of up to $100 million with Silicon Valley Bank and other lenders.
Tiffany Dufu, founder and CEO of The Cru, a New York-based career coaching platform and community for women, posted a video Sunday on LinkedIn from an airport bathroom, saying the bank crisis was testing her resiliency. Given that her money was tied up at Silicon Valley Bank, she had to pay her employees out of her personal bank account. With two teenagers to support who will be heading to college, she said she was relieved to hear that the government’s intent is to make depositors whole.
“Small businesses and early-stage startups don’t have a lot of access to leverage in a situation like this, and we’re often in a very vulnerable position, particularly when we have to fight so hard to get the wires into your bank account to begin with, particularly for me, as a Black female founder,” Dufu told The Associated Press.
Silicon Valley Bank began its slide into insolvency when its customers, largely technology companies that needed cash as they struggled to get financing, started withdrawing their deposits. The bank had to sell bonds at a loss to cover the withdrawals, leading to the largest failure of a U.S. financial institution since the height of the financial crisis.
Treasury Secretary Janet Yellen pointed to rising interest rates, which have been increased by the Federal Reserve to combat inflation, as the core problem for Silicon Valley Bank. Many of its assets, such as bonds or mortgage-backed securities, lost market value as rates climbed.
Sheila Bair, who was chairwoman of the FDIC during the 2008 financial crisis, recalled that with nearly all the bank failures then, “we sold a failed bank to a healthy bank. And usually, the healthy acquirer would also cover the uninsured because they wanted the franchise value of those large depositors so optimally, that’s the best outcome.”
But with Silicon Valley Bank, she told NBC's “Meet the Press,” “this was a liquidity failure, it was a bank run, so they didn’t have time to prepare to market the bank. So they’re having to do that now, and playing catch-up.”
One of Silicon Valley's top banks fails; assets are seized
Regulators rushed Friday to seize the assets of one of Silicon Valley's top banks, marking the largest failure of a U.S. financial institution since the height of the financial crisis almost 15 years ago.
Silicon Valley Bank, the nation’s 16th-largest bank, failed after depositors hurried to withdraw money this week amid anxiety over the bank’s health. It was the second biggest bank failure in U.S. history after the collapse of Washington Mutual in 2008.
The bank served mostly technology workers and venture capital-backed companies, including some of the industry's best-known brands.
“This is an extinction-level event for startups,” said Garry Tan, CEO of Y Combinator, a startup incubator that launched Airbnb, DoorDash and Dropbox and has referred hundreds of entrepreneurs to the bank.
“I literally have been hearing from hundreds of our founders asking for help on how they can get through this. They are asking, ‘Do I have to furlough my workers?’”
There appeared to be little chance of the chaos spreading in the broader banking sector, as it did in the months leading up to the Great Recession. The biggest banks — those most likely to cause an economic meltdown — have healthy balance sheets and plenty of capital.
Nearly half of the U.S. technology and health care companies that went public last year after getting early funding from venture capital firms were Silicon Valley Bank customers, according to the bank’s website.
The bank also boasted of its connections to leading tech companies such as Shopify, ZipRecruiter and one of the top venture capital firms, Andreesson Horowitz.
Tan estimated that nearly one-third of Y Combinator’s startups will not be able to make payroll at some point in the next month if they cannot access their money.
Internet TV provider Roku was among casualties of the bank collapse. It said in a regulatory filing Friday that about 26% of its cash — $487 million — was deposited at Silicon Valley Bank.
Roku said its deposits with SVB were largely uninsured and it didn’t know “to what extent” it would be able to recover them.
As part of the seizure, California bank regulators and the FDIC transferred the bank's assets to a newly created institution — the Deposit Insurance Bank of Santa Clara. The new bank will start paying out insured deposits on Monday. Then the FDIC and California regulators plan to sell off the rest of the assets to make other depositors whole.
Read more: Startup-focused Silicon Valley Bank becomes largest bank to fail since 2008 financial crisis
There was unease in the banking sector all week, with shares tumbling by double digits. Then news of Silicon Valley Bank's distress pushed shares of almost all financial institutions even lower Friday.
The failure arrived with incredible speed. Some industry analysts suggested Friday that the bank was still a good company and a wise investment. Meanwhile, Silicon Valley Bank executives were trying to raise capital and find additional investors. However, trading in the bank’s shares was halted before stock market's opening bell due to extreme volatility.
Shortly before noon, the FDIC moved to shutter the bank. Notably, the agency did not wait until the close of business, which is the typical approach. The FDIC could not immediately find a buyer for the bank's assets, signaling how fast depositors cashed out.
The White House said Treasury Secretary Janet Yellen was “watching closely.” The administration sought to reassure the public that the banking system is much healthier than during the Great Recession.
“Our banking system is in a fundamentally different place than it was, you know, a decade ago,” said Cecilia Rouse, chair of the White House Council of Economic Advisers. “The reforms that were put in place back then really provide the kind of resilience that we’d like to see.”
In 2007, the biggest financial crisis since the Great Depression rippled across the globe after mortgage-backed securities tied to ill-advised housing loans collapsed in value. The panic on Wall Street led to the demise of Lehman Brothers, a firm founded in 1847. Because major banks had extensive exposure to one another, the crisis led to a cascading breakdown in the global financial system, putting millions out of work.
At the time of its failure, Silicon Valley Bank, which is based in Santa Clara, California, had $209 billion in total assets, the FDIC said. It was unclear how many of its deposits were above the $250,000 insurance limit, but previous regulatory reports showed that lots of accounts exceeded that amount.
The bank announced plans Thursday to raise up to $1.75 billion in order to strengthen its capital position. That sent investors scurrying and shares plunged 60%. They tumbled lower still Friday before the opening of the Nasdaq, where the bank's shares were traded.
As its name implied, Silicon Valley Bank was a major financial conduit between the technology sector, startups and tech workers. It was seen as good business sense to develop a relationship with the bank if a startup founder wanted to find new investors or go public.
Conceived in 1983 by co-founders Bill Biggerstaff and Robert Medearis during a poker game, the bank leveraged its Silicon Valley roots to become a financial cornerstone in the tech industry.
Bill Tyler, director of operations for TWG Supply in Grapevine, Texas, said he first realized something was wrong when his employees texted him at 6:30 a.m. Friday to complain that they did not receive their paychecks.
TWG, which has just 18 employees, had already sent the money for the checks to a payroll services provider that used Silicon Valley Bank. Tyler was scrambling to figure out how to pay his workers.
"We’re waiting on roughly $27,000," he said. "It’s already not a timely payment. It’s already an uncomfortable position. I don’t want to ask any employees, to say, ‘Hey, can you wait until mid-next week to get paid?’”
Silicon Valley Bank's ties to the tech sector added to its troubles. Technology stocks have been hit hard in the past 18 months after a growth surge during the pandemic, and layoffs have spread throughout the industry. Venture capital funding has also been declining.
At the same time, the bank was hit hard by the Federal Reserve's fight against inflation and an aggressive series of interest rate hikes to cool the economy.
As the Fed raises its benchmark interest rate, the value of generally stable bonds starts to fall. That is not typically a problem, but when depositors grow anxious and begin withdrawing their money, banks sometimes have to sell those bonds before they mature to cover the exodus.
That is exactly what happened to Silicon Valley Bank, which had to sell $21 billion in highly liquid assets to cover the sudden withdrawals. It took a $1.8 billion loss on that sale.
Ashley Tyrner, CEO of FarmboxRx, said she had spoken to several friends whose businesses are backed by venture capital. She described them as being “beside themselves” over the bank's failure. Tyrner's chief operating officer tried to withdraw her company's funds on Thursday but failed to do so in time.
“One friend said they couldn't make payroll today and cried when they had to inform 200 employees because of this issue,” Tyrner said.
Jaded with education, more Americans are skipping college
When he looked to the future, Grayson Hart always saw a college degree. He was a good student at a good high school. He wanted to be an actor, or maybe a teacher. Growing up, he believed college was the only route to a good job, stability and a happy life.
The pandemic changed his mind.
A year after high school, Hart is directing a youth theater program in Jackson, Tennessee. He got into every college he applied to but turned them all down. Cost was a big factor, but a year of remote learning also gave him the time and confidence to forge his own path.
“There were a lot of us with the pandemic, we kind of had a do-it-yourself kind of attitude of like, ‘Oh — I can figure this out,’” he said. “Why do I want to put in all the money to get a piece of paper that really isn’t going to help with what I’m doing right now?”
Hart is among hundreds of thousands of young people who came of age during the pandemic but didn’t go to college. Many have turned to hourly jobs or careers that don’t require a degree, while others have been deterred by high tuition and the prospect of student debt.
What first looked like a pandemic blip has turned into a crisis. Nationwide, undergraduate college enrollment dropped 8% from 2019 to 2022, with declines even after returning to in-person classes, according to data from the National Student Clearinghouse. The slide in the college-going rate since 2018 is the steepest on record, according to the U.S. Bureau of Labor Statistics.
Economists say the impact could be dire.
At worst, it could signal a new generation with little faith in the value of a college degree. At minimum, it appears those who passed on college during the pandemic are opting out for good. Predictions that they would enroll after a year or two haven’t borne out.
Fewer college graduates could worsen labor shortages in fields from health care to information technology. For those who forgo college, it usually means lower lifetime earnings — 75% less compared with those who get bachelor’s degrees, according to Georgetown University’s Center on Education and the Workforce. And when the economy sours, those without degrees are more likely to lose jobs.
“It’s quite a dangerous proposition for the strength of our national economy,” said Zack Mabel, a Georgetown researcher.
In dozens of interviews with The Associated Press, educators, researchers and students described a generation jaded by education institutions. Largely left on their own amid remote learning, many took part-time jobs. Some felt they weren’t learning anything, and the idea of four more years of school, or even two, held little appeal.
At the same time, the nation's student debt has soared. The issue has loomed large in the minds of young Americans as President Joe Biden pushes to cancel huge swaths of debt, an effort the Supreme Court appears poised to block.
As a kid, Hart dreamed of going to Penn State to study musical theater. His family encouraged college, and he went to a private Christian high school where it’s an expectation.
But when classes went online, he spent more time pursuing creative outlets. He felt a new sense of independence, and the stress of school faded.
“I was like, ‘OK, what’s this thing that’s not on my back constantly?’” Hart said. “I can do things that I can enjoy. I can also do things that are important to me. And I kind of relaxed more in life and enjoyed life.”
He started working at a smoothie shop and realized he could earn a steady paycheck without a degree. By the time he graduated, he had left college plans behind.
It happened at public as well as private schools. Some counselors and principals were shocked to see graduates flocking to jobs at Amazon warehouses or scratching together income in the gig economy.
The shift has been stark in Jackson, where just four in 10 of the county's public high school graduates immediately went to college in 2021, down from six in 10 in 2019. That drop is far steeper than the nation overall, which declined from 66% to 62%, according to the Bureau of Labor Statistics.
Jackson's leaders say young people are taking restaurant and retail jobs that pay more than ever. Some are being recruited by manufacturing companies that have aggressively raised wages to fill shortages.
“Students can’t seem to resist sign-on bonuses and wages that far exceed any that they’ve seen before,” said Vicki Bunch, the head of workforce development for the area’s chamber of commerce.
Across Tennessee, there’s growing concern the slide will only accelerate with the opening of several new manufacturing plants. The biggest is a $5.6 billion Ford plant near Jackson that will produce electric trucks and batteries. It promises to create 5,000 jobs, and its construction is already drawing young workers.
Daniel Moody, 19, was recruited to run plumbing for the plant after graduating from a Memphis high school in 2021. Now earning $24 an hour, he’s glad he passed on college.
“If I would have gone to college after school, I would be dead broke,” he said. “The type of money we’re making out here, you’re not going to be making that while you’re trying to go to college.”
America’s college-going rate was generally on the upswing until the pandemic reversed decades of progress. Rates fell even as the nation's population of high school graduates grew, and despite economic upheaval, which typically drives more people into higher education.
In Tennessee, education officials issued a “call to action” after finding just 53% of public high school graduates were enrolling in college in 2021, far below the national average. It was a shock for a state that in 2014 made community college free, leading to a surge in the college-going rate. Now it's at its lowest point since at least 2009.
Searching for answers, education officials crossed the state last year and heard that easy access to jobs, coupled with student debt worries, made college less attractive.
“This generation is different,” said Jamia Stokes, a senior director at SCORE, an education nonprofit. “They’re more pragmatic about the way they work, about the way they spend their time and their money.”
Most states are still collecting data on recent college rates, but early figures are troubling.
In Arkansas, the number of new high school graduates going to college fell from 49% to 42% during the pandemic. Kentucky slid by a similar amount, to 54%. The latest data in Indiana showed a 12-point drop from 2015 to 2020, leading the higher education chief to warn the “future of our state is at risk.”
Even more alarming are the figures for Black, Hispanic and low-income students, who saw the largest slides in many states. In Tennessee's class of 2021, just 35% of Hispanic graduates and 44% of Black graduates enrolled in college, compared with 58% of their white peers.
There's some hope the worst has passed. The number of freshmen enrolling at U.S. colleges increased slightly from 2021 to 2022. But that figure, along with total college enrollment, remains far below pre-pandemic levels.
Amid the chaos of the pandemic, many students fell through the cracks, said Scott Campbell, executive director of Persist Nashville, a nonprofit that offers college coaching.
Some students fell behind academically and didn't feel prepared for college. Others lost access to counselors and teachers who help navigate college applications and the complicated process of applying for federal student aid.
“Students feel like schools have let them down,” Campbell said.
In Jackson, Mia Woodard recalls sitting in her bedroom and trying to fill out a few online college applications. No one from her school had talked to her about the process, she said. As she scrolled through the forms, she was sure of her Social Security number and little else.
“None of them even mentioned anything college-wise to me,” said Woodard, who is biracial and transferred high schools to escape racist bullying. “It might be because they didn’t believe in me.”
She says she never heard back from the colleges. She wonders whether to blame her shaky Wi-Fi, or if she simply failed to provide the right information.
A spokesperson for the Jackson school system, Greg Hammond, said it provides several opportunities for students to gain exposure to higher education, including an annual college fair for seniors.
“Mia was an at-risk student,” Hammond said. “Our school counselors provide additional supports for high school students in this category. It is, however, difficult to provide post-secondary planning and assistance to students who don’t participate in these services.”
Woodard, who had hoped to be the first in her family to get a college degree, now works at a restaurant and lives with her dad. She’s looking for a second job so she can afford to live on her own. Then maybe she'll pursue her dream of getting a culinary arts degree.
“It’s still kind of 50-50,” she said of her chances.
If there’s a bright spot, experts say, it’s that more young people are pursuing education programs other than a four-year degree. Some states are seeing growing demand for apprenticeships in the trades, which usually provide certificates and other credentials.
After a dip in 2020, the number of new apprentices in the U.S. has rebounded to near pre-pandemic levels, according to the Department of Labor.
Before the pandemic, Boone Williams was the type of student colleges compete for. He took advanced classes and got A's. He grew up around agriculture and thought about going to college for animal science.
But when his school outside Nashville sent students home his junior year, he tuned out. Instead of logging on for virtual classes, he worked at local farms, breaking horses or helping with cattle.
“I stopped applying myself once COVID came around,” the 20-year-old said. “I was focusing on making money rather than going to school.”
When a family friend told him about union apprenticeships, he jumped at the chance to get paid for hands-on work while mastering a craft.
Today he works for a plumbing company and takes night classes at a Nashville union.
The pay is modest, Williams said, but eventually he expects to earn far more than friends who took quick jobs after high school. He even thinks he’s better off than some who went to college — he knows too many who dropped out or took on debt for degrees they never used.
“In the long run, I’m going to be way more set than any of them,” he said.
Back in Jackson, Hart says he's doing what he loves and contributing to the city's growing arts community. Still, he wonders what's next. His job pays enough for stability but not a whole lot more. He sometimes finds himself thinking about Broadway, but he doesn't have a clear plan for the next 10 years.
“I do worry about the future and what that may look like for me," he said. "But right now I’m trying to remind myself that I am good where I’m at, and we’ll take it one step at a time.”
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This story was produced with support from the Education Writers Association Reporting Fellowship program.
The Associated Press education team receives support from the Carnegie Corporation of New York.
Here’s how the 4 Americans abducted in Mexico were found
The anonymous tip that led Mexican authorities to a remote shack where four abducted Americans were held described armed men, people wearing blindfolds and plenty of activity around a ranch.
Authorities headed for the rural area east of Matamoros on Tuesday morning, leaving the highway and driving remote dirt roads looking for the described location, according to Mexican investigative documents viewed Friday by The Associated Press.
Finally, they saw the wooden shack far from any homes or businesses, surrounded by brush, and a white pickup parked outside that matched the one the Americans had been loaded into last Friday. Then they began to hear someone shouting, “Help!”
Inside the shack, the documents said, Latavia “Tay” McGee and Eric Williams were blindfolded. Beside them were the bodies of Shaeed Woodard and Zindell Brown, wrapped in blankets and plastic bags. When authorities arrived, McGee and Williams shouted desperately to them in English.
A guard who tried to escape out a back door was quickly apprehended, the documents said. He was wearing a tactical vest, but there is no mention of him being armed.
Also Read: Two kidnapped Americans found dead in Mexico, 2 others alive
The four Americans had crossed into Matamoros from Texas so that McGee could have cosmetic surgery. About midday, they were fired on in downtown Matamoros and then loaded into the pickup truck. Another friend, who remained in Brownsville, called police after being unable to reach the group that crossed the border. A Mexican woman, Areli Pablo Servando, 33, was also killed, apparently by a stray bullet.
In the letter obtained by The Associated Press through a Tamaulipas state law enforcement official Thursday, the Scorpions faction of the Gulf cartel apologized to the residents of Matamoros where the Americans were kidnapped, Servando, and the four Americans and their families.
But relatives of the abducted Americans said that the purported apology has done little to dull the pain of their loved ones being killed or wounded.
Woodard’s father said he was speechless upon hearing that the cartel had apologized for the violent abduction captured in video that spread quickly online.
“I’ve just been trying to make sense out of it for a whole week. Just restless, couldn’t sleep, couldn’t eat. It’s just crazy to see your own child taken from you in such a way, in a violent way like that. He didn’t deserve it,” James Woodard told reporters Thursday, referring to his son’s death.
The cousin of Williams, who was shot in the left leg during the kidnapping, said his family feels “great” knowing he’s alive but does not accept any apologies from the cartel.
“It ain’t gonna change nothing about the suffering that we went through,” Jerry Wallace told the AP on Thursday. Wallace, 62, called for the American and Mexican governments to better address cartel violence.
U.S. Ambassador Ken Salazar told reporters Friday that U.S. officials had contacted President Andrés Manuel López Obrador directly over the weekend to ask for help in locating the missing Americans in Matamoros. He said the cartel there “must be dismantled.”
The letter attributed to the cartel condemned last week’s violence and said the gang turned over to authorities its own members who were responsible.
“We have decided to turn over those who were directly involved and responsible in the events, who at all times acted under their own decision-making and lack of discipline,” the letter reads, adding that those individuals had gone against the cartel’s rules, which include “respecting the life and well-being of the innocent.”
A photograph of five bound men face-down on the pavement accompanied the letter, which was shared with The Associated Press by the official on condition that they remain anonymous because they were not authorized to share the document.
A separate state security official said that five men had been found tied up inside one of the vehicles that authorities had been searching for, along with the letter. That official also spoke on condition of anonymity because they were not authorized to speak about the case.
On Friday, Tamaulipas state prosecutor Irving Barrios said via Twitter that five people related to the violence had been arrested on charges of aggravated kidnapping and homicide. He said only one other person had been arrested in recent days.
How passengers teamed up to restrain man on chaotic flight
A passenger who helped restrain a threatening man on a weekend flight from Los Angeles to Boston said Tuesday that the entire chaotic episode was over within seconds thanks to teamwork.
Simik Ghookasian said in a telephone interview that he was seated several rows behind the man, who had quietly tried to open an airliner’s emergency door before trying to stab a flight attendant with a broken metal spoon, according to prosecutors.
“I heard the guy getting louder and louder and I thought it was just an argument, but he started yelling and screaming and threatening people, threatening to kill them,” said Ghookasian, a Los Angeles government contractor flying to Boston on United Flight 2609 on Sunday for work.
Until the yelling, he hadn’t noticed anything unusual about the man, who federal authorities have identified as Francisco Severo Torres.
Ghookasian said he saw the spoon and he was among five or six passengers who piled onto Torres and removed it from his grasp. It turned out to be the handle of a metal spoon, from which the bowl portion had been broken off, authorities said.
“That guy was really strong and was really resisting,” Ghookasian said. “We had a hard time holding him down. It was total teamwork.”
Ghookasian asked a flight attendant for some zip ties or duct tape, and the flight attendant produced some zip ties.
Ghookasian, who said he has first aid and counter-terrorism training, said he didn’t have time to be scared, he just reacted and used his instincts.“Everything just exploded in a few seconds,” he said.
Torres, 33, of Leominster, Massachusetts, was arrested when the plane arrived in Boston and charged with interference and attempted interference with flight crew members and attendants using a dangerous weapon, federal prosecutors said. He was detained pending a hearing scheduled for Thursday.
The plane was about 45 minutes from Boston when the crew received an alarm that a side door on the aircraft was disarmed, according to court documents. One flight attendant noticed the door’s locking handle had been moved. Another flight attendant had noticed that Torres was seen near the door and believed he had moved the handle.
Airplane doors cannot be opened once in flight due to cabin pressure.
The crew told the captain that he was a threat and the plane should be landed as soon as possible, authorities said.
Then Torres approached two flight attendants, according to the court documents. One of the flight attendants felt the metal object in Torres’ hand hit him on his shirt collar and tie three times.
Torres told investigators that he went into the airplane’s bathroom and broke a spoon in half to make a weapon, prosecutors said in the documents. They say he told authorities he wanted to open the door so that he could jump out of the plane.
Investigators said Torres admitted knowing that if he opened the door many people would die.
Torres said the flight attendants confronted him and he stabbed one of them in an attempt to defend himself, according to investigators. They said he believed the flight attendant was trying to kill him.
Authorities did not say where Torres got the spoon, but TSA rules allow airline passengers to bring metal utensils except knives onto planes.
United Airlines said no one was injured.
“Thanks to the quick action of our crew and customers, one customer was restrained after becoming a security concern on United flight 2609 from Los Angeles to Boston,” the company statement said. “The flight landed safely and was met by law enforcement.”
If convicted of the charges against him, Torres could face life in prison.
An email seeking comment from him was sent to his federal public defender, and a voicemail was left.
Torres has previously sued two mental health facilities where he was patient, according to federal court records. He sued the state-run Worcester Recovery Center and Hospital in March 2021, alleging medical malpractice for misdiagnosis. That suit was dismissed several months later.
He also sued Fuller Hospital in Attleboro, Massachusetts last May, alleging his constitutional rights were violated because he was a vegan and was denied almond milk. The suit was dismissed in June.
In both cases he acted as his own attorney.