Business
Elon Musk’s Unmatched Power in the Stars
On March 17, Gen. Mark A. Milley, the chairman of the Joint Chiefs of Staff, and Gen. Valeriy Zaluzhnyi, the leader of Ukraine’s Armed Forces, dialed into a call to discuss Russia’s invasion of Ukraine. Over the secure line, the two military leaders conferred on air defense systems, real-time battlefield assessments and shared intelligence on Russia’s military losses.
They also talked about Elon Musk.
General Zaluzhnyi raised the topic of Starlink, the satellite internet technology made by Mr. Musk’s rocket company, SpaceX, three people with knowledge of the conversation said. Ukraine’s battlefield decisions depended on the continued use of Starlink for communications, General Zaluzhnyi said, and his country wanted to ensure access and discuss how to cover the cost of the service.
General Zaluzhnyi also asked if the United States had an assessment of Mr. Musk, who has sprawling business interests and murky politics — to which American officials gave no answer.
Mr. Musk, who leads SpaceX, Tesla and Twitter, has become the most dominant player in space as he has steadily amassed power over the strategically significant field of satellite internet. Yet faced with little regulation and oversight, his erratic and personality-driven style has increasingly worried militaries and political leaders around the world, with the tech billionaire sometimes wielding his authority in unpredictable ways.
Since 2019, Mr. Musk has sent SpaceX rockets into space nearly every week that deliver dozens of sofa-size satellites into orbit. The satellites communicate with terminals on Earth, so they can beam high-speed internet to nearly every corner of the planet. Today, more than 4,500 Starlink satellites are in the skies, accounting for more than 50 percent of all active satellites. They have already started changing the complexion of the night sky, even before accounting for Mr. Musk’s plans to have as many as 42,000 satellites in orbit in the coming years.
The power of the technology, which has helped push the value of closely held SpaceX to nearly $140 billion, is just beginning to be felt.
Starlink is often the only way to get internet access in war zones, remote areas and places hit by natural disasters. It is used in Ukraine for coordinating drone strikes and intelligence gathering. Activists in Iran and Turkey have sought to use the service as a hedge against government controls. The U.S. Defense Department is a big Starlink customer, while other militaries, such as in Japan, are testing the technology.
But Mr. Musk’s near total control of satellite internet has raised alarms.
A combustible personality, the 52-year-old’s allegiances are fuzzy. While Mr. Musk is hailed as a genius innovator, he alone can decide to shut down Starlink internet access for a customer or country, and he has the ability to leverage sensitive information that the service gathers. Such concerns have been heightened because no companies or governments have come close to matching what he has built.
In Ukraine, some fears have been realized. Mr. Musk has restricted Starlink access multiple times during the war, people familiar with the situation said. At one point, he denied the Ukrainian military’s request to turn on Starlink near Crimea, the Russian-controlled territory, affecting battlefield strategy. Last year, he publicly floated a “peace plan” for the war that seemed aligned with Russian interests.
At times, Mr. Musk has openly flaunted Starlink’s capabilities. “Between, Tesla, Starlink & Twitter, I may have more real-time global economic data in one head than anyone ever,” he tweeted in April.
Mr. Musk did not respond to requests for comment. SpaceX declined to comment.
Worried about over-dependence on Mr. Musk’s technology, Ukrainian officials have talked with other satellite internet providers, though they acknowledged none rival Starlink’s reach.
“Starlink is indeed the blood of our entire communication infrastructure now,” Mykhailo Fedorov, Ukraine’s digital minister, said in an interview.
At least nine countries — including in Europe and the Middle East — have also brought up Starlink with American officials over the past 18 months, with some questioning Mr. Musk’s power over the technology, two U.S. intelligence officials briefed on the discussions said. Few nations will speak publicly about their concerns, for fear of alienating Mr. Musk, said intelligence and cybersecurity officials briefed on the conversations.
U.S. officials have said little publicly about Starlink as they balance domestic and geopolitical priorities related to Mr. Musk, who has criticized President Biden but whose technology is unavoidable.
The federal government is one of SpaceX’s biggest customers, using its rockets for NASA missions and launching military surveillance satellites. Senior Pentagon officials have tried mediating issues involving Starlink, particularly Ukraine, a person familiar with the discussions said.
The Defense Department confirmed it contracts with Starlink, but it declined to elaborate, citing “the critical nature of these systems.”
Other governments are wary. Taiwan, which has an internet infrastructure that could be vulnerable in the event of a Chinese invasion, is reluctant to use the service partly because of Mr. Musk’s business links to China, Taiwanese and American officials said.
China has its own concerns. Mr. Musk said last year that Beijing sought assurances that he would not turn Starlink on inside the country, where the internet is controlled and censored by the state. In 2020, China registered with an international body to launch 13,000 internet satellites of its own.
The European Union, partly driven by misgivings about Starlink and Mr. Musk, also earmarked 2.4 billion euros, or $2.6 billion, last year to build a satellite constellation for civilian and military use.
“This is not just one company, but one person,” Dmitri Alperovitch, a cybersecurity expert who co-founded the Silverado Policy Accelerator think tank and has advised governments on satellite internet. “You are completely beholden to his whims and desires.”
Reaching for the skies
Sir Martin Sweeting, a British engineer who founded the satellite design and manufacturing company Surrey Satellite Technology, was encouraged by a business associate in 2001 to meet with a “chap who wants to put a greenhouse on Mars.” It turned out to be Mr. Musk.
Mr. Sweeting and Mr. Musk met soon after for breakfast at a space conference in Colorado, where the tech entrepreneur criticized NASA and talked about building a private space fleet.
“He was very focused,” said Mr. Sweeting, whose company later received an investment from Mr. Musk and had him on its board of directors before it sold to Airbus in 2009.
Mr. Musk was also interested in an emerging field of research where small satellites are placed in the sky several hundred miles above sea level, an area known as “low-Earth orbit,” Mr. Sweeting said.
Their work together was one of the earliest examples of Mr. Musk’s focus on a technology that would help underpin Starlink. Satellites dating to the 1960s are typically bigger — often the size of school buses — and located higher in space, in what is known as “geosynchronous orbit,” limiting their communication capabilities. Smaller satellites can orbit at a lower altitude, allowing them to link up with terminals on Earth to beam high-speed internet service to far-flung locations.
Many small satellites are necessary for this to work. That’s because as one satellite moves above a Starlink terminal on land, it hands the internet signal to another satellite behind it to keep up a single, uninterrupted flow to users below.
Mr. Musk launched his first Starlink satellites into orbit in 2019. At the time, satellite internet was viewed as a fool’s errand. In the 1990s and 2000s, other companies had pursued low-orbit communication satellites with little success because of the expense and technical difficulties of getting them into space.
But Mr. Musk had an advantage. SpaceX’s rockets return to Earth after a trip to space and are partially reusable. This effectively gave him control of an express train to constantly deliver satellites to space, sometimes dozens at a time.
Now nearly every week, a SpaceX rocket loaded with Starlink satellites takes off from a site in California or Florida. Each satellite is designed to work for about three and half years. There are so many in orbit that they are often mistaken for shooting stars. Astronomers have documented how the devices have interfered with research telescopes and warned about the risk of collisions.
“The night sky is one of the most glorious shows that nature puts on and humans are changing it forever,” said Patrick Seitzer, an astronomer at the University of Michigan who studies orbital debris.
Starlink provides internet download speeds typically around 100 megabits per second, comparable to many landline services. SpaceX generally charges individual customers about $600 for each terminal that receives a connection from space, plus a monthly service fee of about $75, with costs higher for businesses and governments. The company knows the location, movement and altitude of each Starlink terminal, experts said.
The service, which officially debuted in 2021 in a handful of countries, is now available in more than 50 countries and territories, including the United States, Japan, much of Europe and parts of Latin America. In Africa, where internet access lags the rest of the world, Starlink is available in Nigeria, Mozambique and Rwanda, with more than a dozen other countries following by the end of 2024, according to Starlink’s website.
“Everywhere on earth will have high bandwidth, low latency internet,” Mr. Musk predicted on the Joe Rogan podcast in 2020.
Militaries, telecom companies, airlines, cruise lines and maritime shippers have flocked to Starlink, which has said it has more than 1.5 million subscribers.
Rivals have struggled, though competition is growing. OneWeb, a British company, was so plagued by financial difficulties that it had to be bailed out by the British government and sold to a group of investors. Amazon, founded by Jeff Bezos, who owns the rocket company Blue Origin, plans a Starlink competitor, Project Kuiper, but it has yet to get a satellite into space.
Lifeline on the battlefield
No event has demonstrated Starlink’s power — and Mr. Musk’s influence — more than the war in Ukraine.
More than 42,000 Starlink terminals are now used in Ukraine by the military, hospitals, businesses and aid organizations. During Russian bombing campaigns last year that caused widespread blackouts, Ukraine’s public agencies turned to Starlink to stay online.
“Without Starlink, we cannot fly, we cannot communicate,” said one Ukrainian deputy commander who goes by the nickname Zub, or Tooth, and who spoke on the condition of anonymity for security reasons.
Starlink entered Ukraine in February 2022, when Russia invaded and a cyberattack — later attributed to Russia — took down a satellite system run by the high-speed communications company Viasat that was being used by the Ukrainian military. With troops and commanders knocked offline, Mr. Fedorov, the digital minister, posted a plea to Mr. Musk for help.
Within hours, Mr. Musk contacted Mr. Fedorov to say that Starlink had been activated in Ukraine. Days later, Starlink terminals arrived.
The technology — found in forests, fields, villages and mounted on the roofs of military vehicles — has given Ukraine’s army a major advantage over Russian forces. It has enabled artillery teams, commanders and pilots to watch drone footage simultaneously while chatting online. The response times from finding a target to hitting it have been cut to about a minute from nearly 20 minutes, soldiers said.
“The huge number of lives that Starlink has helped save can be measured in the thousands,” Mr. Fedorov said. “This is one of the fundamental components of our success.”
But concerns among Ukrainian and Western officials about Mr. Musk’s hold over the technology have grown, coming to a head last fall when he repeatedly made comments about the war that raised questions about his commitment to Starlink’s service in Ukraine.
In September, at a private event on world and business affairs in Aspen, Colo., which was attended by then-House Speaker Nancy Pelosi and others, Mr. Musk proposed a peace plan for Ukraine that included Russia annexing Ukrainian land. The proposal outraged many attendees.
Around this time, questions arose about who would pay for Starlink’s service in Ukraine. SpaceX had initially covered some of the costs, with the United States and other allies also providing funding.
That same month, SpaceX told the U.S. Defense Department that it could not continue the arrangement and asked the Pentagon to take over funding. The company estimated the cost at nearly $400 million over 12 months, according to a SpaceX letter reported by CNN, which was verified by The New York Times.
The Biden administration directed a top Pentagon official, Colin H. Kahl, to mediate. On Oct. 7, Mr. Kahl called Mr. Musk, who expressed fears that Ukraine would use Starlink to not just defend itself, but also conduct offensive operations to regain territory seized by Russia, which could cause significant Russian military casualties, a former administration official said. Mr. Kahl told Mr. Musk more people in Ukraine would suffer if Starlink was shut down.
Mr. Musk nonetheless turned off access for some Starlink terminals in Ukraine. Late last year, about 1,300 Starlink terminals purchased through a British supplier stopped working in the country after the Ukrainian government could not pay the $2,500 monthly fee for each, two people with knowledge of the matter said.
Starlink access also fluctuated depending on the movements of the war as Russia won territory and Ukraine fought to take it back. As the battle lines shifted, Mr. Musk used a process called geofencing to restrict where Starlink was available on the front lines. SpaceX uses location data gathered by its service to enforce geofencing limits.
This caused problems. When Ukrainian troops tried retaking cities like Kherson in Russian-controlled areas in the fall, they needed internet access to communicate. Mr. Fedorov and members of the armed forces messaged Mr. Musk and SpaceX employees requests to restore service in areas where the army was advancing.
Mr. Fedorov said SpaceX responded “very promptly.”
Mr. Musk had other red lines that he would not cross. He refused Ukraine’s request last year to provide Starlink access near Crimea, the Russian-controlled peninsula, so it could send an explosive-filled maritime drone into Russian ships docked in the Black Sea, two people familiar with the discussions said. Mr. Musk later said that Starlink could not be used for long-range drone strikes.
Other U.S. officials have weighed in. In June, Defense Secretary Lloyd Austin approved a Pentagon deal to buy 400 to 500 new Starlink terminals and services. The deal gives the Pentagon control of setting where Starlink’s internet signal works inside Ukraine for those new devices to carry out “key capabilities and certain missions,” two people familiar with the deal said. This appeared intended to provide Ukraine with dedicated terminals and services to conduct sensitive functions without fear of interruption.
Unlike traditional defense contractors, whose weapon sales to foreign countries are typically done through the federal government, Starlink is a commercial product. That allows Mr. Musk to act in ways that sometimes do not align with U.S. interests, such as when SpaceX said it could not continue funding Starlink in Ukraine, said Gregory C. Allen, a former Defense Department official who worked at Blue Origin.
“It has certainly been a long time since we’ve seen a company and an individual like this go pretty openly against U.S. foreign policy in the middle of a war,” said Mr. Allen, who is now at the Center for Strategic and International Studies.
Mr. Musk’s behavior has divided Ukrainian officials. Mykhailo Podolyak, an adviser to President Volodymyr Zelensky, said on Twitter in February that SpaceX needed to pick a side.
But Mr. Fedorov said questions about Mr. Musk’s commitment were unfair. When Ukraine was under heavy bombardment and facing major power outages in November, Mr. Musk helped expedite the delivery of about 10,000 Starlink terminals, he said.
“SpaceX and Elon Musk have shown through their deeds whose side they are actually on,” Mr. Fedorov said.
From Taiwan to Europe
In February, two undersea internet cables running between Taiwan’s main island and the outlying islands of Matsu were severed by Chinese shipping vessels. The incident interrupted online access across Matsu, intensifying concerns that Taiwan’s communications infrastructure was vulnerable.
Taiwan, which China has claimed as its own territory, would seem to be an ideal place to bring in Starlink. But Taiwan was reluctant — a concern increasingly echoed elsewhere as governments weigh the power of satellite internet against the risks of working with Mr. Musk.
Taiwanese officials had spoken with SpaceX about Starlink, said Jason Hsu, a former Taiwan legislator who advises the government on digital infrastructure. But talks slowed partly because of “tremendous concerns” about Mr. Musk, whose financial interests are tied to China, he said. With roughly 50 percent of new Tesla cars estimated to be manufactured in Shanghai, Taiwan did not trust Mr. Musk to provide Starlink access if Beijing applied pressure to turn off the service, he added.
“We worry that if we order devices from Starlink, we’ll fall into some sort of trap,” said Mr. Hsu, now a senior research fellow at Harvard Kennedy School in Taipei. “Elon has huge commercial interests in China.”
When a U.S. congressional delegation visited Taiwan in April, Representative Michael McCaul of Texas, a Republican and chairman of the House Foreign Affairs Committee, asked the Taiwanese president, Tsai Ing-wen, during a lunch about potentially using Starlink, according to committee staff on the trip. Ms. Tsai was noncommittal. Congressional aides concluded soon after that the service was not a viable option for Taiwan because of Mr. Musk’s links to China, the committee staff said.
Audrey Tang, Taiwan’s digital minister, said the country struck a deal with OneWeb in June and had not ruled out working with any satellite provider. “We want to test as many constellations as possible,” she said.
Mr. Musk’s influence has been debated elsewhere. In the European Union, concerns about Starlink’s dominance influenced the 27-nation bloc to set aside 2.4 billion euros last year for a “sovereign” satellite constellation, to launch as soon as 2027.
“Space has become a highly contested domain where the European Union must safeguard its vital interests,” said Thierry Breton, the European commissioner overseeing the project. “The E.U. cannot afford to be reliant on others.”
To address government needs, SpaceX last year introduced a Starlink-related service, Starshield, that offered stronger security for handling classified material and processing sensitive data.
Starlink also faces criticism from more authoritarian governments.
When anti-government protests broke out in Iran last year, Mr. Musk made Starlink available there to help activists stay online. The Iranian government accused SpaceX of violating its sovereignty.
China complained this year to a United Nations panel that SpaceX was putting so many satellites into orbit that it would prevent others from accessing space. In February, Turkey refused Mr. Musk’s offer to provide Starlink access after a major earthquake, which civil society groups viewed as an effort to prevent unfavorable news from spreading online.
“The government was afraid that Starlink is not under its control, and could represent a threat,” said Chérif El Kadhi, a policy analyst tracking Turkey for Access Now, a digital rights organization.
Mr. Musk’s dominance in space is unlikely to be equaled any time soon. In May, Amazon prepared to put its first two satellites into orbit, but the launch was put on hold after a problem was discovered in rocket testing.
Since then, Mr. Musk has sent at least 595 more Starlink satellites into space.
Business
Elon Musk, Mark Zuckerberg and Jeff Bezos to Attend Trump’s Inauguration
Bezos, Zuckerberg and Coke at the inauguration
Corporate America had already raced to donate big sums to Donald Trump’s record-breaking inaugural fund. Now some of its leaders appear eager to jockey for prominent positions at the inauguration next week.
It’s a new reminder that for some of the nation’s biggest businesses, forging close ties to a president-elect who is promising hard-hitting policies like tariffs is a priority this time around.
Jeff Bezos and Mark Zuckerberg are expected to be on the inauguration dais, according to NBC News, alongside Elon Musk and several cabinet picks.
The presence of Musk isn’t a surprise, given the Tesla chief’s significant support of and huge influence over Trump. But the other tech moguls have only more recently been seen as supporters of the administration. (Indeed, Bezos frequently sparred with Trump during his first presidential term.)
It’s the latest effort by Bezos and Zuckerberg to burnish their Trump credentials. At the DealBook Summit in December, Bezos — whose Amazon has faced scrutiny under the Biden administration and whose Blue Origin is hoping to win government rocket contracts — said that he was “very hopeful” about Trump’s efforts to reduce regulation.
And Zuckerberg recently announced significant changes to Meta’s content moderation policy, including relaxing restrictions on speech seen as protecting groups including L.G.B.T.Q. people that won praise from Trump and other conservatives. On the inauguration front, Zuckerberg is also co-hosting a reception alongside the longtime Trump backers Miriam Adelson, Tilman Fertitta and Todd Ricketts.
Both tech moguls have visited Mar-a-Lago since the election, with Zuckerberg having done so more than once.
Coca-Cola took a different tack. The drinks giant’s C.E.O., James Quincey, gave Trump what an aide called the “first ever Presidential Commemorative Inaugural Diet Coke bottle.”
More broadly, business leaders want a piece of the inauguration action. The Times previously reported that the Trump inaugural fund had surpassed $170 million, a record, and that even major donors have been wait-listed for events.
Others are throwing unofficial events around Washington, including an “Inaugural Crypto Ball” that will feature Snoop Dogg, with tickets starting at $5,000, The Wall Street Journal reports.
It’s a reminder that C.E.O.s are reading the room, and preparing their companies for a president who has proposed creating an “External Revenue Service” to oversee what he has promised will be wide-ranging tariffs.
David Urban, a longtime Trump adviser who’s hosting a pre-inauguration event, told The Journal, “This is the world order, and if we’re going to succeed, we need to get with the world order.”
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In other Trump news: The president-elect is expected to appear via videoconference at the World Economic Forum in Davos, Switzerland, which starts on Inauguration Day, according to Semafor.
HERE’S WHAT’S HAPPENING
Investors brace for the latest inflation data. The Consumer Price Index report, due out at 8:30 a.m. Eastern, is expected to show that inflation ticked up last month, most likely because of climbing food and fuel costs. Global bond markets have been rattled as slow progress on slowing inflation has prompted the Fed to slash its forecast for interest rate cuts.
More Trump cabinet picks will appear before the Senate on Wednesday. Senator Marco Rubio of Florida, the choice for secretary of state, is expected to field questions about his views on the Middle East, Ukraine and China, but is expected to be confirmed. Russell Vought, the pick to run the Office of Management and Budget, will most likely be asked about his advocacy for drastically shrinking the federal government, a key Trump objective. And Sean Duffy, the Fox Business host chosen to lead the Transportation Department, will probably face questions on how he would oversee matters including aviation safety and autonomous vehicles, the latter of which is a priority for Elon Musk.
Meta plans to lay off another 5 percent of its employees. Mark Zuckerberg, the tech giant’s C.E.O., told staff members to prepare for “extensive performance-based cuts” as the company braces for “an intense year.” The social media giant faces intense competition in the race to commercialize artificial intelligence.
A new bill would give TikTok a reprieve from a ban in the United States. Senator Ed Markey, Democrat of Massachusetts, said he planned to introduce the Extend the TikTok Deadline Act, which would give the video platform 270 additional days to be divested from its Chinese parent, ByteDance before being blacklisted. It’s the latest effort to buy TikTok time, as the app faces a Jan. 19 deadline set by a law; President-elect Donald Trump has opposed the potential ban as well.
A question of succession
JPMorgan Chase and BlackRock, the giant money manager, just reported earnings. (In short: Both handily beat analyst expectations.)
But the Wall Street giants are likely to face questioning on a particular issue on Wednesday: Which top lieutenants are in line to replace their larger-than-life C.E.O.s, Jamie Dimon and Larry Fink.
Who’s out:
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Daniel Pinto, who had long been Dimon’s right-hand man, said he would officially drop his responsibilities as JPMorgan’s C.O.O. in June and retire at the end of 2026. Jenn Piepszak, the co-C.E.O. of the company’s core commercial and investment bank, has become C.O.O.
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And Mark Wiedman, the head of BlackRock’s global client business and a top contender to succeed Fink, is planning to leave, according to news reports.
What Wall Street is gossiping about JPMorgan: Even in taking the C.O.O. role, JPMorgan said that Piepszak wasn’t interested in succeeding Dimon “at this time.” DealBook hears that while she genuinely appears not to want to pursue the top job, the phrasing covers her in case she changes her mind.
For now, that means the most likely candidates for the top spot are Marianne Lake, the company’s head of consumer and community banking; Troy Rohrbaugh, the other co-head of the commercial and investment bank; and Doug Petno, a co-head of global banking.
The buzz around BlackRock: Wiedman reportedly didn’t want to keep waiting to succeed Fink and is expected to seek a C.E.O. position elsewhere. (So sudden was his departure that he’s forfeiting about $8 million worth of stock options and, according to The Wall Street Journal, he doesn’t have another job lined up yet.)
Fink said on CNBC on Wednesday that Wiedman’s departure had been in the works for some time, with the executive having expressed a desire to leave about six months ago.
Other candidates to take over for Fink include Martin Small, BlackRock’s C.F.O.; Rob Goldstein, the firm’s C.O.O.; and Rachel Lord, the head of international.
But Dimon and Fink aren’t going anywhere just yet. Dimon, 68, said only last year that he might not be in the role in five years. And Fink, 72, said in July that he was working on succession planning: “When I do believe the next generation is ready, I’m out.”
The S.E.C. gets in a final shot at Musk
Another battle between Elon Musk and the S.E.C. erupted on Tuesday, with the agency suing the tech mogul over his 2022 purchase of Twitter.
It’s unclear what happens to the lawsuit once President-elect Donald Trump, who counts Musk as a close ally, takes office. But the agency’s reputation as an independent watchdog may be at stake.
A recap: The S.E.C. accused Musk of violating securities laws in his $44 billion acquisition of the social media company.
The agency said that Musk had failed to disclose his Twitter ownership stake for a pivotal 11-day stretch before revealing his intentions to purchase the company. That breach allowed him to buy up at least $150 million worth of Twitter shares at a lower price — to the detriment of existing shareholders, the agency argues.
The S.E.C. isn’t just seeking to fine Musk. It wants him to pay back the windfall. “That’s unusual,” Ann Lipton, a professor at Tulane Law School, told DealBook.
Alex Spiro, Musk’s lawyer, called the latest action a “sham” and accused the agency of waging a “multiyear campaign of harassment” against him.
The showdown sets up a tough question for the S.E.C. Will Paul Atkins, the president-elect’s widely respected pick to lead the agency, drop the case? Such a move could call the bedrock principle of S.E.C. independence into question.
Jay Clayton, who led the agency during Trump’s first term, earned the respect of the business community for running it in a largely drama-free manner. It was under Clayton that the S.E.C. sued Musk over his statements about taking Tesla private.
Musk, who is set to become Trump’s cost-cutting czar and is expected to have office space in the White House complex, has called for the “comprehensive overhaul” of agencies like the S.E.C. The billionaire said he would also like to see “punitive action against those individuals who have abused their regulatory power for personal and political gain.”
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In related news: The Consumer Financial Protection Bureau sued Capital One, accusing it of cheating its depositors out of $2 billion in interest payments.
THE SPEED READ
Deals
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DAZN, the streaming network backed by the billionaire businessman Len Blavatnik, is closing in on funding from Saudi Arabia’s sovereign wealth fund as the kingdom continues to expand its sports footprint. (NYT)
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The Justice Department sued KKR, accusing the investment giant of withholding information during government reviews for several of its deals. KKR filed a countersuit. (Bloomberg)
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OpenAI added Adebayo Ogunlesi, the billionaire co-founder of the infrastructure investment firm Global Infrastructure Partners, to its board. (FT)
Politics and policy
Best of the rest
We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.
Business
For uninsured fire victims, the Small Business Administration offers a rare lifeline
As wildfires continue to burn around Southern California, thousands of business owners, homeowners and renters are confronting the daunting challenge of rebuilding from the ashes. For some number of them, the road ahead will be all the more difficult because they didn’t have any or enough insurance to cover their losses. For them, the U.S. Small Business Administration is a possible lifeline.
The SBA, which offers emergency loans to businesses, homeowners, renters and nonprofits, is among the few relief options for those who don’t have insurance or are underinsured. Uninsured Angelenos can also apply for disaster assistance through the Federal Emergency Management Agency, or FEMA.
The current wildfires are ravaging a state that was already in the midst of a home insurance crisis. Thousands of homeowners have lost their insurance in recent years as providers pull out of fire-prone areas and jack up their prices in the face of rising risk.
“For those who are not going to get that insurance payout, this is available,” Small Business Administration head Isabella Casillas Guzman said in an interview during a recent trip to the fire areas. “The loans are intended to fill gaps, and that is very broad.”
About one-third of businesses don’t have insurance and three-quarters are underinsured, Guzman said.
“There will be residual effects around the whole community,” she said. “Insurance will not cover this disaster.”
Businesses, nonprofits and small agricultural cooperatives can apply for an economic injury loan or a physical damage loan through SBA. Homeowners are eligible for physical damage loans. Economic injury loans are intended to help businesses meet ordinary financial demands, while physical damage loans provide funds for repairs and restoration. People can apply online and loans must be repaid within 30 years.
Renters can receive up to $100,000 in assistance, homeowners up to $500,000 and businesses up to $2 million, according to Guzman. Homeowners and renters who cannot get access to credit elsewhere can qualify for loans with a interest rate of 2.5%. The SBA determines an applicant has no credit available elsewhere if they do not have other funds to pay for disaster recovery and cannot borrow from nongovernment sources.
Interest rates for homeowners and renters who do have access to credit elsewhere are just over 5%. Loans for businesses could come with interest rates of 4% or 8% depending on whether the business has other credit options.
An applicant must show they are able to repay their loan and have a credit history acceptable to the SBA in order to be approved. The loans became available following President Biden’s declaration of a major disaster in California.
“We’ve already received hundreds of applications from individuals and businesses interested in exploring additional support,” Guzman said. “We know the economic disruption may not be contained to the footprint of any evacuation zones or power outages.”
People who don’t have insurance or whose insurance doesn’t cover the entirety of their losses are eligible for loans, Guzman said. While many will use the funds to start from scratch after losing their property to the fires, businesses that are still standing can also apply for support to cover lost revenue.
Guzman was not able to estimate the total value of loans they expect to offer in California but said the organization is on solid financial footing after temporarily running out of funds in October.
“Funding has been replenished by Congress, and we expect to be able to coordinate closely with Congress,” Guzman said. “We’re fully funded and in a good position to provide support.”
Business
Cookies, Cocktails and Mushrooms on the Menu as Justices Hear Bank Fraud Case
In a lively Supreme Court argument on Tuesday that included references to cookies, cocktails and toxic mushrooms, the justices tried to find the line between misleading statements and outright lies in the case of a Chicago politician convicted of making false statements to bank regulators.
The case concerned Patrick Daley Thompson, a former Chicago alderman who is the grandson of one former mayor, Richard J. Daley, and the nephew of another, Richard M. Daley. He conceded that he had misled the regulators but said his statements fell short of the outright falsehoods he said were required to make them criminal.
The justices peppered the lawyers with colorful questions that tried to tease out the difference between false and misleading statements.
Chief Justice John G. Roberts Jr. asked whether a motorist pulled over on suspicion of driving while impaired said something false by stating that he had had one cocktail while omitting that he had also drunk four glasses of wine.
Caroline A. Flynn, a lawyer for the federal government, said that a jury could find the statement to be false because “the officer was asking for a complete account of how much the person had had to drink.”
Justice Ketanji Brown Jackson asked about a child who admitted to eating three cookies when she had consumed 10.
Ms. Flynn said context mattered.
“If the mom had said, ‘Did you eat all the cookies,’ or ‘how many cookies did you eat,’ and the child says, ‘I ate three cookies’ when she ate 10, that’s a false statement,” Ms. Flynn said. “But, if the mom says, ‘Did you eat any cookies,’ and the child says three, that’s not an understatement in response to a specific numerical inquiry.”
Justice Sonia Sotomayor asked whether it was false to label toxic mushrooms as “a hundred percent natural.” Ms. Flynn did not give a direct response.
The case before the court, Thompson v. United States, No. 23-1095, started when Mr. Thompson took out three loans from Washington Federal Bank for Savings between 2011 and 2014. He used the first, for $110,000, to finance a law firm. He used the next loan, for $20,000, to pay a tax bill. He used the third, for $89,000, to repay a debt to another bank.
He made a single payment on the loans, for $390 in 2012. The bank, which did not press him for further payments, went under in 2017.
When the Federal Deposit Insurance Corporation and a loan servicer it had hired sought repayment of the loans plus interest, amounting to about $270,000, Mr. Thompson told them he had borrowed $110,000, which was true in a narrow sense but incomplete.
After negotiations, Mr. Thompson in 2018 paid back the principal but not the interest. More than two years later, federal prosecutors charged him with violating a law making it a crime to give “any false statement or report” to influence the F.D.I.C.
He was convicted and ordered to repay the interest, amounting to about $50,000. He served four months in prison.
Chris C. Gair, a lawyer for Mr. Thompson, said his client’s statements were accurate in context, an assertion that met with skepticism. Justice Elena Kagan noted that the jury had found the statements were false and that a ruling in Mr. Thompson’s favor would require a court to rule that no reasonable juror could have come to that conclusion.
Justices Neil M. Gorsuch and Brett M. Kavanaugh said that issue was not before the court, which had agreed to decide the legal question of whether the federal law, as a general matter, covered misleading statements. Lower courts, they said, could decide whether Mr. Thompson had been properly convicted.
Justice Samuel A. Alito Jr. asked for an example of a misleading statement that was not false. Mr. Gair, who was presenting his first Supreme Court argument, responded by talking about himself.
“If I go back and change my website and say ‘40 years of litigation experience’ and then in bold caps say ‘Supreme Court advocate,’” he said, “that would be, after today, a true statement. It would be misleading to anybody who was thinking about whether to hire me.”
Justice Alito said such a statement was, at most, mildly misleading. But Justice Kagan was impressed.
“Well, it is, though, the humblest answer I’ve ever heard from the Supreme Court podium,” she said, to laughter. “So good show on that one.”
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