The Morning Risk Report

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Good morning. Senators on Tuesday questioned Federal Deposit Insurance Corp. Chairman Martin Gruenberg over the agency’s handling of allegations of harassment and discrimination revealed by a Wall Street Journal investigation.

“What the hell is going on at the FDIC?” asked Sen. John Kennedy (R., La.).

Gruenberg told a Senate panel he is “personally disturbed and deeply troubled” by the allegations. He said he was previously unaware of the allegations of workplace problems before the Journal article.

On Monday, the Journal published an investigation that found a toxic work environment at the FDIC had for years caused women to quit the agency.

• What Gruenberg intends to do: “It’s quite clear that we’ve had employees at the FDIC subjected to experiences that simply are unacceptable and can’t be tolerated,” Gruenberg said. “It’s really going to be incumbent on the agency to take all actions necessary to come to grips with this and to address it effectively.”
  
   
• Law firm hired: In his opening statement before the committee, Gruenberg said the agency is conducting a “comprehensive review” of the workplace culture. Gruenberg told staff on Monday that the agency had hired a law firm, BakerHostetler, to lead that review.

Big oil producer lines up African carbon deals ahead of climate talks.

Climate negotiations this month seek to reach agreement on rules to create a global market for trading carbon credits.

One of the world’s biggest exporters of fossil fuels, the United Arab Emirates, is attempting to position itself as a leader in establishing global carbon markets, even as many environmentalists raise concerns about “greenwashing.”

SEC received record number of whistleblower tips in fiscal year 2023.

The Securities and Exchange Commission received a record number of whistleblower tips during its fiscal year 2023 ended Sept. 30, the agency said Tuesday.

The SEC’s whistleblower award program, established by the 2010 Dodd-Frank Act, received more than 18,000 tips, the most in its history and about 50% higher than the previous record number a year earlier.

The tip-for-cash program also issued whistleblower awards totaling about $600 million in fiscal 2023, including its largest-ever $279 million award made to one whistleblower in a bribery case against telecommunications company Ericsson. The SEC also imposed about $5 billion in financial remedies from 784 enforcement actions, second only to fiscal year 2022’s record amount.

—Mengqi Sun

• Charter Communications agreed to pay $25 million to settle the Securities and Exchange Commission’s claims that the cable giant violated rules around internal accounting controls when it issued stock buybacks that weren’t authorized by its board.
  
   
• American cloud providers, under pressure from European customers and regulators, are offering data-security guarantees that go beyond strict local privacy rules. The changes answer a lot of European regulators’ concerns about data handling, reports WSJ Pro Cybersecurity’s Catherine Stupp.
  
   
• A former aide to U.S. Rep. George Santos pleaded guilty to wire fraud Tuesday for impersonating a high-ranking House staffer while fundraising.
  
   
• A U.K. lawyer was convicted for tipping off a client about a confidential Serious Fraud Office investigation into money laundering, the SFO said. William Osmond, who was convicted Tuesday, was the first solicitor ever charged with a “tipping off” offense, the SFO said. Osmond is scheduled to be sentenced on Nov. 30.

iPhone maker braces for China’s ire over founder’s Taiwan presidential bid.

Foxconn Technology, one of Apple’s biggest suppliers, said it has contingency plans in case the company faces repercussions in China over its founder’s bid for the Taiwan presidency.

Foxconn Chairman Young Liu said Tuesday on a call with investors that the company had to be prepared for all possibilities and has implemented measures as part of its business continuity management.

With interest rates above 9%, small businesses slam the brakes.

With borrowing costs double their levels from just two years ago, many small businesses are pulling back, another sign of how higher interest rates are cooling the economy.

What are they doing? Some entrepreneurs are postponing equipment purchases and expansion plans, while others are delaying hiring, rethinking loan terms or stepping up efforts to collect payments on time. Keeping borrowing costs in check and managing cash flow is an added challenge for business owners already dealing with labor shortages, inflation and economic uncertainty

• After a year of near-zero economic growth, job creation in Europe is slowing and surveys suggest that more businesses in the region are preparing to lay off workers, threatening to further damp growth and drain public coffers.
  
   
• Inflation’s broad slowdown extended through October, likely ending the Federal Reserve’s historic interest-rate increases.
  
   
• House lawmakers approved a Republican plan Tuesday that would continue funding federal agencies until early next year, a critical step in averting a partial government shutdown.
  
   
• Towns in Mid-America are facing water shortages as they grapple with a multiyear drought.
  
   
• Residential real-estate brokerages are seeking to reassure investors after last month’s $1.8 billion verdict against the National Association of Realtors, another potential blow to an industry already reeling from a severe housing-market slowdown.
  
   
• The world spent the past decade-plus taking advantage of rock-bottom interest rates to binge on debt. An unprecedented bill is coming due.
  
   
• Japan’s economy shrank for the first time in three quarters in the July-September period because of sluggish household and corporate spending, contrasting with the U.S. and China, which showed solid growth during the quarter.

• The White House said Tuesday that Hamas and the Palestinian Islamic Jihad are using hospitals in Gaza, including Al-Shifa, for their operations but the U.S. remains opposed to Israel conducting airstrikes against the besieged hospital amid a widening humanitarian crisis in the Palestinian territory.
  
   
• Wall Street has slashed its estimates for corporate profits in the final months of 2023. Yet investors appear to be taking the shifting picture in stride, partly because much of the blame appears to fall on just two companies: Pfizer and Merck.
  
   
• Former President Donald Trump has breathed new life into a push by media companies to televise his federal trial on election-subversion charges, but the odds of cameras being in the courtroom remain slim.
  
   
• The section of Interstate 10 in Los Angeles that was damaged by a fire this weekend is expected to reopen in three to five weeks, California Gov. Gavin Newsom said Tuesday.