The Week in Enterprise: A $900 Million Mistake

Hope you all stay warm. Here’s a quick recap of the business and technical news for the week ahead. – Charlotte Cowles

Citigroup made an embarrassing mistake last summer accidentally transferring $ 900 million to a group of lenders instead of a much smaller interest payment it was going to send. Since then, Citigroup has been trying to regain the money it sent on behalf of the beauty company Revlon. As a rule, recipients of mistakenly wired money have to send the money back. But last week a judge ruled that the lenders could keep it all. His reasoning: They had reason to believe the payment, which covered everything Revlon owed, was intentional. The decision is a severe blow to Citigroup, which appeals.

Understand what happened to GameStop

That was the question Congress members asked themselves as they grilled key players in the GameStop trading frenzy that hijacked the stock market last month and caused many investors large and small to lose money. At the center of the hearing was Vlad Tenev, the executive director of online brokerage firm Robinhood, which did most of GameStop’s business, but suddenly stopped it when they hit a fever level on Jan. 28. Mr Tenev re-stated that GameStop trades have been stopped due to new requests from the clearing houses that execute them. He apologized to its users for the company’s shortcomings, but also insisted that Robinhood had done nothing wrong and did not privilege powerful business partners at the expense of retail investors, as some critics have suggested. It is unclear what – if anything – lawmakers and regulators will do to contain such turmoil in the future.

Walmart, the country’s largest private employer, said it would raise wages for 425,000 of its employees. That means roughly half of the 1.5 million workers in the US will make at least $ 15 an hour. But many of its workers will still earn less. Walmart’s minimum wage remains at $ 11 an hour, unlike those of its biggest competitors like Target and Amazon, whose wages both start at $ 15 an hour. The company’s announcement came about a week after its chairman, Doug McMillon, met with President Biden and discussed the government’s interest in raising the national minimum wage from its current $ 7.25 an hour to $ 15 an hour.

Texas is recovering from a crazy cold snap that left millions of people without electricity and running water for days, but the economy is still battered. Agriculture is literally frozen and cattle are dying. Several semiconductor companies have been forced to cease production, creating a global computer chip shortage that has already slowed automobile manufacturing in factories around the world. But disastrous events like this can become the new normal. Economists – including a senior Federal Reserve official – warn that banks need to be better prepared for disruptions to manufacturing, energy, and other sectors.

The House of Representatives plans to vote on the Biden government’s $ 1.9 trillion pandemic rescue package on the first floor next Friday. Democrats hope to have the measure passed before March 14, when the federal additional unemployment benefit ($ 300 per week on top of existing state unemployment benefits) expires. Due to a loophole in the law, the economic stimulus plan could be passed with a simple Congress majority and without Republican support.

The Australian government has proposed a law that will encourage tech companies to pay news outlets (and in turn help them raise advertising dollars) for the content shared on their platforms. This poses obvious problems for giants like Facebook and Google, who are taking opposite approaches to the proposal. Facebook took a fighting stance by blocking all news links from its platforms indefinitely. Google, on the other hand, announced a three-year deal to compensate Rupert Murdoch’s News Corp for its content, and said similar partnerships are in the works. Other countries could follow in Australia’s footsteps if the law is successful.

Retail sales rose 5.3 percent in January, suggesting Americans spent rather than bailing out the stimulus checks received at the end of the year. Parler, the social network that went offline after it attracted millions of Trump supporters who incited violence at the time of the Capitol uprising, is back in operation. And the New York attorney general has sued Amazon, accusing the company of providing inadequate safety protection for workers in New York City during the pandemic and taking revenge on employees who raised concerns.

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