A Russian fighter jet collided with a U.S. drone flying in international airspace on Tuesday, sending the uncrewed aircraft crashing into the Black Sea, the U.S. military announced.
The uncrewed MQ-9 Reaper drone was making a routine flight before it was intercepted by two Russian Su-27 fighter jets. The warplanes dumped jet fuel on the drone and flew in front of it in a “reckless, environmentally unsound and unprofessional manner,” according to a statement from U.S. European Command.
One of the Russian aircraft then struck the drone’s propeller, sending the Reaper crashing into the Black Sea, said Air Force Gen. James Hecker, commander of U.S. Air Forces Europe.
“In fact, this unsafe and unprofessional act by the Russians nearly caused both aircraft to crash," he added. “U.S. and Allied aircraft will continue to operate in international airspace and we call on the Russians to conduct themselves professionally and safely.”
The downing of the drone comes amid continued tensions between both countries over the war in Ukraine.
The statement added the incident over the Black Sea also follows “a pattern of dangerous actions” involving U.S. and allied aircraft and Russian planes.
“These aggressive actions by Russian aircrew are dangerous and could lead to miscalculation and unintended escalation,” European Command said.
During a briefing with reporters on Tuesday, National Security Council spokesperson John Kirby said the State Department will “make our concerns known” with Moscow. He noted this marks the first time one of these aerial intercepts “resulted in a splashing of one of our drones.”
One Reaper drone costs roughly $14 million.
Gen. Christopher Cavoli, supreme allied commander for Europe, has briefed allies on the incident, according to a NATO official.
A senior diplomat in Eastern Europe, who was granted anonymity due to the sensitivity of the issue, said officials are concerned "as it shows the aggressiveness of the Russian conduct. … This again shows the importance of the Black Sea and the need to have an approach on it for medium and long term.”
Alexander Ward and Lili Bayer contributed to this report.
CHICAGO — Illinois politicians, including Gov. JB Pritzker, and wealthy corporate leaders are sweetening their pitch to host the 2024 Democratic convention by pledging to make sure the DNC can walk away debt-free.
In the city’s battle with other finalists, New York City and Atlanta, the governor, his sister and former Commerce secretary Penny Pritzker, businessman Michael Sacks, Cubs co-owner Laura Ricketts and Illinois AFL-CIO President Tim Drea have been in talks about funding Chicago’s effort. It’s a lineup of resources designed to blunt the fears of repeating the 2012 convention in Charlotte, N.C., which ended with an $8 million tab.
“We have a strong fundraising community that will be able to raise the money for the convention and not create any debt for the DNC, the city of Chicago or the state of Illinois. It would be a win for everyone financially and electorally,” Chicago Federation of Labor President Robert Reiter said in an interview. “And it would put thousands of people to work.”
But what’s gone largely unsaid — at least officially — is the governor’s own riches.
JB Pritzker, a billionaire with presidential potential, is a noted philanthropist and a prolific Democratic donor who cut checks last year for incumbent governors like Michigan’s Gretchen Whitmer and the Democratic parties in Minnesota and Wisconsin.
Pritzker’s team is hoping to lure the party to Chicago with what’s essentially a financially risk-free 2024 convention. Federal funds don’t generally cover conventions, though security for the U.S. Secret Service is funded through a federal grant for as much as $50 million to pay for, among other things, additional police presence. So having a billionaire governor as a stopgap could be alluring.
“The governor has spoken directly to Joe Biden and committed that Chicago has the ability to fund the convention,” Natalie Edelstein, a spokesperson for the Chicago bid, told POLITICO.
Conventions are costly affairs. When the 2012 Democratic convention wrapped, Democrats still owed money on everything from operational expenses to construction work and modifications made to the Time Warner Cable Arena. To deal with the $8 million bill, the city of Charlotte secured a $10 million line of credit from Duke Energy, an electric utility in the region. But Democrats didn’t repay Duke, which claimed the money as a business expense, drawing criticism for leaving shareholders to foot the bill.
Those organizing Chicago’s bid expect the price tag to run between $80 million and $100 million.
A priority for Chicago and Atlanta is fundraising, which relies on four pillars: organized labor, national corporations, political donors and local businesses and leaders.
“If one of those entities is not participating, it becomes almost impossible to fundraise,” said a Democratic strategist who’s consulted on conventions.
President Joe Biden has already sought to nudge his party south, pushing South Carolina up the Democratic presidential nominating calendar, and awarding the convention to Atlanta would bring more attention to Georgia, which swung his way in 2020. Labor leaders in New York have also tried to spike Atlanta over its dearth of unionized hotels and the idea that such a pro-union president would take the convention to a right-to-work state.
Still, some Midwestern Democratic elected officials have recommended Chicago to the DNC, according to letters written by Michigan Gov. Gretchen Whitmer and others.
A potential strike among food workers at Chicago’s United Center, which would be the centerpiece location of the convention, caused some recent concern about the viability of the bid. But the tensions appear to be close to a resolution. UNITE HERE Local 1 and Levy Restaurants have reached a tentative agreement, and union members are expected to ratify it in the coming days.
The effort to bring the Democratic convention to Chicago is also reminiscent of the city’s business community stepping up in 2009 for an ill-fated bid for the 2016 Olympic Games.
But another undercurrent around Chicago’s push for 2024 attention is the persistent concern about the city’s crime, which upended the mayor’s race this winter. Mayor Lori Lightfoot, who was seen as a strong voice to represent the city in a convention, was bumped from the runoff, leaving two candidates at the extreme ends of the Democratic Party about public safety and policing.
Mitch McConnell was discharged from the hospital on Monday and is recovering from his concussion, according to a spokesperson for the Senate minority leader.
Communications Director David Popp said in a statement that McConnell's medical team discovered he suffered a "minor rib fracture" after his fall at a D.C. hotel last week, for which he's also receiving treatment. But the Kentucky Republican's concussion recovery was “proceeding well."
“At the advice of his physician, the next step will be a period of physical therapy at an inpatient rehabilitation facility before he returns home,” Popp said.
The statement did not disclose when McConnell will return to the Senate.
McConnell had fallen at a private dinner eventheld at the Waldorf Astoria last Wednesday, where a Super PAC aligned with McConnell, the Senate Leadership Fund, had hosted an event that evening.
The Kentucky Republican, who is 81 and had polio as a child, had previously fractured his shoulder back in 2019 after tripping on his patio at home.
Former Rep. Barney Frank and Sen. Elizabeth Warren — two key architects of the post-2008 system of Wall Street regulation — are at odds over what's dragging down banks once again.
Frank, who chaired the House Financial Services Committee in the wake of the global financial crisis and wrote sweeping new rules enacted in 2010, most recently served on the board of New York's Signature Bank, which regulators shut down Sunday.
From his front-row seat, he blames Signature's failure on a panic that began with last year's cryptocurrency collapse — his bank was one of few that served the industry — compounded by a run triggered by the failure of tech-focused Silicon Valley Bank late last week. Frank disputes that a bipartisan regulatory rollback signed into law by former President Donald Trump in 2018 had anything to do with it, even if it was driven by a desire to ease regulation of mid-size and regional banks like his own.
"I don't think that had any impact," Frank said in an interview. "They hadn't stopped examining banks."
But Warren, a fellow Massachusetts Democrat who designed landmark consumer safeguards that ended up in Frank's 2010 banking law, is placing the blame firmly on the Trump-era changes that relaxed oversight of some banks and says Signature is a prime example of the fallout.
"Had Congress and the Federal Reserve not rolled back the stricter oversight, SVB and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks," Warren wrote Monday in a New York Times op-ed.
The rift between Frank and Warren is just a preview of what's to come as Democrats sort out positions on how to respond to the latest banking crisis, which led to a weekend bailout of depositors at Silicon Valley Bank and Signature. Some like Warren want Washington restore the tougher regulations that were rolled back in 2018. Some Democrats, like Frank, say the 2018 law isn't the problem. A number of moderate Democrats still in Congress helped write the 2018 legislation, including those facing reelection in 2024.
Frank, who served on Signature's board since 2015, said his bank was in "good shape" but was hit with a run generated by “the nervousness and beyond nervousness from SVB and crypto.” The bank’s digital assets business made it the “unfortunate victim of the panic that really goes back to FTX," the cryptocurrency exchange that failed last year.
Frank said other lenders were in trouble the last few days, with the Federal Home Loan Bank telling Signature when it applied for money on Friday that “they didn’t have enough to go around because they were getting so many requests.”
Frank said Signature, now in the hands of regulators, will probably sell for close to what the bank’s leaders believed it’s worth.
"The FDIC and the state of New York looked at things and made their decision," Frank said. "Frankly, I was surprised by it. They apparently had a more negative view of our solvency."
A Signature spokesperson declined to comment on what happened with the bank. New York Gov. Kathy Hochul said Monday that federal and state regulators “saw that a run on a regional bank could pose a great risk to our stability."
The 2018 law that eased banking regulations advanced with a degree of encouragement from Frank, who was on Signature's board at the time. He was a proponent of raising a $50 billion asset threshold in his 2010 law that triggered stricter oversight.
Congress ended up changing the framework so that banks would be eligible for greater regulatory scrutiny once they reached $100 billion in assets and then automatically face the toughest regulation at $250 billion.
Signature was poised to be a major beneficiary of the change, with assets of about $44 billion in 2018. It had $110 billion in assets as of this weekend.
Frank said Sunday that he didn't think changing the threshold to $250 billion from $50 billion "had any impact."
"I think, if it hadn't been for FTX and the extreme nervousness about crypto, that this wouldn't have happened — even to SVB or to us," he said. "And that wasn't something that could have been anticipated by regulators."
Warren is now holding up Signature — and SVB — as a reason why Congress and the regulators should reverse any light-touch bank supervision triggered by the 2018 law. Silicon Valley Bank had assets of about $209 billion when it failed, up from about $57 billion at the end of 2018.
"SVB and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks," she said in the New York Times. "They would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses. But because those requirements were repealed, when an old-fashioned bank run hit SVB, the bank couldn’t withstand the pressure — and Signature’s collapse was close behind."
Frank and Warren appear to be converging on one issue — support for greater depositor protections. Federal deposit insurance is capped at $250,000, but the Biden administration and regulators have essentially pledged to back all deposits at the failed banks.
Warren said in her New York Times op-ed that regulators should reform deposit insurance so that during this crisis and in the future "businesses that are trying to make payroll and otherwise conduct ordinary financial transactions are fully covered — while ensuring the cost of protecting outsized depositors is borne by those financial institutions that pose the greatest risk."
Frank said he felt vindicated by the government’s decision to guarantee all deposits because, when served in the House, he wanted to pass legislation that would expand deposit insurance, especially for businesses.
He wants Congress to revive that idea and look at what's a reasonable amount to help cover payrolls — in his view tens of millions of dollars.
Had the government announced its deposit backstop on Friday, “we wouldn’t have had the problem.”
Federal Reserve Chair Jerome Powell suddenly has a major new concern to weigh in his year-long battle against inflation: a string of bank failures.
The spectacular collapse of Silicon Valley Bank, along with two other lenders, has sparked fears about broader financial instability in the U.S. and abroad. That could upend the Fed's efforts to curb inflation by raising interest rates at the fastest pace in four decades.
Anxiety over rising rates — which played a role in Silicon Valley Bank's death— is ratcheting up. As a result, Fed officials might be reluctant to act too aggressively even as they worry that inflation is not slowing enough, as the latest release of the Consumer Price Index on Tuesday is likely to show.
The stakes are enormous: If the central bank holds back on rate hikes, that could lead inflation to stay higher for longer, further eating into Americans' paychecks. If it forges ahead, it could risk triggering more financial turmoil.
“Now, they’re in a position where if they hike [half a percentage point] at the next meeting, that’s gasoline on the fire,” said John Fagan, who led the Treasury Department's markets room from 2014 to 2018.
Economists at Goldman Sachs on Sunday night already said they “no longer expect [the Fed] to deliver a rate hike … with considerable uncertainty about the path beyond March.”
Fed policymakers next meet on March 21-22, where they have been widely expected to raise rates for the ninth straight time.
Powell faced sharp criticism last week from progressives like Sen. Elizabeth Warren and Rep. Ayanna Pressley, both Massachusetts Democrats who blasted him over the Fed’s willingness to allow joblessness to rise by cranking up rates. Their allies are now starting to cite financial stability concerns as yet another reason the Fed should pause.
“The Fed’s actions to fight increasing inflation will need to be materially adjusted, which it should be anyway because inflation is driven by many factors that are beyond the Fed’s control,” Dennis Kelleher, head of financial reform advocacy group Better Markets, said in a statement.
SVB's sudden fall adds a new wrinkle to the already complicated inflation fight that may determine whether the U.S. falls into a recession. Higher costs have been fed by supply chain snarls, record amounts of government spending, Russia’s war in Ukraine and a reopening of the economy that sparked a burst of activity — all of which have emboldened companies to raise prices.
Lawmakers have remained largely deferential to Powell’s efforts to restrict the economy’s growth to bring down inflation. They're waiting to see whether the Fed can achieve a so-called soft landing, where price spikes cool without a significant economic slump.
Now, after SVB’s failure, which required aggressive action by the government to avoid wider financial panic, the Fed chief might have to tread more carefully.
Former Fed Governor Daniel Tarullo, who was in charge of regulations at the central bank under President Barack Obama, said if there are signs that loan officers are pulling back, that would naturally clamp down on growth even without a move from the Fed.
“You might have an even greater contractionary effect by raising rates more,” he said. “And the converse of that is, maybe you justify [a smaller rate hike] at a particular meeting, or standing pat.”
“I’m not talking about the March meeting necessarily,” he added. “You’d need to do some more analysis before you had a measure of confidence that’s what’s happening, but if you did think that’s what’s happening, absolutely it would affect your monetary policy decision-making.”
Heading into the rate decision this month, much will depend on conditions in financial markets.
Said Goldman Sachs's economists: “While we agree that more tightening will likely be needed to address the inflation problem if financial stability concerns abate, we think Fed officials are likely to prioritize financial stability for now, viewing it as the immediate problem and high inflation as a medium-term problem."
Adding to the confusion is that Fed officials have now entered their pre-meeting “blackout” period, where they don’t discuss interest rate policy for a week and a half before a decision. Investors will have to parse what they know about Powell’s approach to managing risk and weigh that alongside fresh inflation data coming out this week.
Efforts by the Fed and FDIC to reassure Americans that they have access to their money might help take some of the immediate pressure off.
“Aggressive action to tame run-risk should also free up the Fed to pursue the monetary policy it thinks is appropriate to manage inflation rather than be trapped by … fear of amplifying financial sector stress,” said Krishna Guha, a former New York Fed official who is now vice chairman at investment firm Evercore ISI.
