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Boeing CEO David Calhoun is set to appear before Congress today to address safety concerns at the troubled aircraft company. Lawmakers are expected to question Calhoun about Boeing's latest plan to fix its manufacturing problems. Relatives of those who died in the two Boeing 737 Max crashes will also be present. The hearing comes after a panel blew out of a 737 Max during a flight in January, raising fresh concerns about the company's best-selling commercial aircraft. Calhoun's testimony is seen as a necessary step for Boeing to regain public trust. The Justice Department is also considering whether to prosecute Boeing for violating terms of a settlement following the fatal crashes. Despite Boeing's efforts to improve safety, the company continues to face challenges, including investigations into falsely documented parts in its supply chain and damage to a Southwest Airlines 737 Max.

 

U.S. News

Navigating the NIST AI Framework

In the ever-evolving landscape of cybersecurity, the rapid advancements in artificial intelligence (AI) have brought both tremendous opportunities and significant risks. To effectively manage these risks, cybersecurity professionals and IT managers are evaluating several existing frameworks to adapt their processes to this new landscape. The National Institute of Standards and Technology (NIST) has released the NIST AI Risk Management Framework (RMF), a framework with the goal of helping organizations manage AI risk.

In this guide, we will provide a comprehensive overview of AI risk, the challenges you might run into, and how NIST AI RMF will help safeguard AI systems.

Download now

 

McDonald's is ending its trial run of artificial intelligence (AI) for its drive-thru. The company will remove the AI chatbot technology from over 100 restaurants, but may consider bringing it back in a different form. McDonald's stated that voice-ordering solutions for drive-thru will be part of its future. Mason Smoot, the chief restaurant officer for McDonald's USA, explained that the decision to end the partnership with IBM on automated order taking (AOT) was made after a thoughtful review. The technology will be shut off in all restaurants currently testing it by July 26th 2024. McDonald's has been testing drive-thru voice AI since 2021. IBM said the AOT technology that emerged from the partnership has “some of the most comprehensive capabilities in the industry, fast and accurate” in demanding conditions. “While McDonald’s is revaluating and refining its plans for AOT, we look forward to continuing to work with them on a variety of other projects."

 

CNN

USA Today

New York Post

Al.com

A report by the International Monetary Fund (IMF) suggests that governments should introduce taxes on excess profits and a green levy to make up for AI-related carbon emissions and the impact of the technology on jobs. “Given the large amount of energy consumed by AI servers, taxing the associated carbon emissions is a good way to reflect the external environmental costs in the price of the technology,” the IMF said. The report went on to advise against taxing investment in AI but suggested raising capital income taxes such as corporation tax and personal income taxes on interest, dividends and capital gains. This would support the anticipated increase in welfare spending due to job losses from AI, the IMF said.

 

The Guardian

Cybercriminals are demanding payments of as much as $5m from as many as 10 companies breached in a campaign that targeted customers of cloud-based data analytics business Snowflake, according to a security firm that is helping with the investigation. Austin Larsen, a senior threat analyst at Google 's Mandiant security business, which helped lead Snowflake's inquiry, said the hackers are at a “new stage” as they seek to profit from the most valuable information they have stolen, including by auctioning companies' data on illegal online forums in an attempt to pressure them into making payments. “We anticipate the actor to continue to attempt to extort victims,” Larsen said. Snowflake on June 2 announced that cybercriminals had launched a “targeted” effort directed against its clients that used single-factor authentication techniques.

 

Bloomberg

The Federal Reserve has ordered Evolve Bancorp to strengthen its risk management programs and comply with anti-money laundering laws. The Arkansas-based bank was found to have insufficient policies during a 2023 examination. The enforcement action, which did not come with a fine, is separate from the bankruptcy proceedings of Synapse Financial Technologies, Inc., a partner of Evolve. Evolve stated that the order is similar to those received by others in the industry and does not impact its business or customers. Synapse, a middleman between banks and fintech companies, filed for bankruptcy in April, resulting in frozen accounts for customers of its partners. The bankruptcy case revealed an $85m shortfall between Synapse's partner banks and what depositors are owed.

 

U.S. News

The collapse of Archegos Capital Management has exposed the risks posed by family offices to banks and public companies. Family offices, which have long escaped regulations, were previously considered inconsequential to the market. However, Archegos' $10bn losses and the downfall of Credit Suisse have shown that unchecked family offices can have a significant impact. Despite calls for more transparency and oversight, new rules have not specifically targeted this segment of the investing world. The number of single family offices globally has grown to at least 10,000, managing over $2tn in assets. While some reforms have been proposed, such as forcing banks to disclose more about their positions and subjecting family offices to more oversight, they have not been implemented.

 

Bloomberg

The Public Company Accounting Oversight Board (PCAOB) is expanding liability for individuals involved in firm violations and proposed tighter rules around one of the ways auditors gather evidence to detect financial misstatements. It has voted to change the threshold for liability for contributors to accounting firms’ violations of auditing standards, lowering it to negligence from recklessness. The contributors are usually partners in charge of an audit or another firm that assisted in the work. The rule permits the PCAOB to penalize partners or assisting firms that played a direct, substantial role in conflicts of interest, as well as failures related to the controls that firms use to assess the quality of audits. The proposal has been criticized by the Center for Audit Quality which says it could deter new entrants into the profession and spur excessive monitoring and unproductive behavior from auditors seeking to protect themselves. 

 

Accounting Today

Journal of Accountancy

Wall Street Journal

Japan has enacted legislation requiring tech giants including Google and Apple to provide access to third-party smartphone apps and payment systems on their platforms or face significant fines. Similar to the EU's Digital Markets Act, the law mandates fair treatment and availability of operating systems, browsers, and search engines. Operators found engaging in anti-competitive behavior will be fined up to 20% of their revenue, rising to 30% if they persist. The Japan Fair Trade Commission stated that aligning efforts with the US and Europe is necessary for fair competition in digital markets. The law, which prohibits acts that restrict competition related to specified software, is expected to take effect by the end of 2025.

 

The Peninsula

The head of the U.S. Consumer Financial Protection Bureau (CFPB), Rohit Chopra, has called on lawmakers to adopt stronger protections against the collection and use of consumer data from payment processing and buy-now-pay-later services (BNPL). He cited recent media reports that companies like JPMorgan Chase and PayPal planned to use customer payment data for targeted advertising, stating that "the United States is slowly lurching toward more financial surveillance and even financial censorship." He also expressed concerns about BNPL services potentially compromising consumer data privacy. In response to Mr. Chopra's remarks, a representative from JPMorgan Chase clarified that the company only allows customers to opt in to receive coupons for online shopping and does not share personal information. The CFPB recently issued a rule treating BNPL companies as credit card providers, requiring them to investigate disputed charges and issue refunds. Mr. Chopra's testimony followed a Supreme Court decision upholding the constitutionality of the CFPB's funding structure, and saw him reject allegations that the CFPB is illegally drawing funding from the Federal Reserve.

 

American Banker

Reuters

Starbucks and Coca-Cola have applied to re-register their trademarks in Russia to protect their intellectual property rights after exiting the country in response to Moscow's invasion of Ukraine in 2022. Starbucks, which once had 130 stores and nearly 2,000 employees in Russia, completed its sale in June 2023. The buyers reopened the chain as Stars Coffee. Coca-Cola officially stopped the sale in Russia of its key brands, Coca-Cola, Sprite and Fanta. Its former Russian division has rebranded as Multon Partners and sells a product called Dobry Cola (Good Cola).

 

Reuters

Donald Trump's new proposal to exempt tips from taxation could potentially add $150bn-$250bn to the federal budget deficit over 10 years, according to the Committee for a Responsible Federal Budget. This estimate suggests that the impact on the deficit would be comparable, if not larger, than the projected revenue loss from extending the 2017 tax cuts for small businesses and pass-through companies. "Although the Trump campaign has not outlined its proposal in detail, we assume it would make tip income exempt from federal income and payroll taxes. On a static basis, we estimate this would reduce revenue by $150 to $250 billion between Fiscal Year (FY) 2026 through FY 2035, depending on how fast tip income grows and over what distribution of income it is concentrated," the report stated. The tax exemption for tips is part of Trump's strategy to appeal to younger voters. Speaking in Florida on June 14th, he said: "No tax on tips, OK? It's done. Done. And we need to spread the word so that every time you leave a tip for the next five months, you put on the receipt, 'Vote for Trump because there's no tax on tips.'"

 

Bloomberg

Newsweek

A policy group led by the United Steelworkers union and domestic manufacturers is calling for the U.S. to enact stronger trade barriers to Chinese imports. The Alliance for American Manufacturing (AAM) published a report on China's excess industrial capacity, echoing concerns raised by the Biden administration and U.S. allies. The group called for the revival and modernization of the Section 421 safeguard, which allows temporary tariffs on import surges from China. AAM stated that Beijing's failure to abide by its WTO commitments and state-driven support for critical sectors necessitates the reinstatement of the Section 421 tool. The report highlighted job losses and plant closures caused by Chinese imports and emphasized the need for a proactive approach. The recommendations come as G7 leaders discuss China's industrial policies and subsidies. European Union officials have also imposed punitive tariffs on Chinese EVs. AAM President Scott Paul welcomed the U.S. and EU tariff actions, stating that they validate concerns about China's overcapacity and subsidies. The group recommended steps to counter China's circumvention of U.S. tariffs, including strengthening anti-dumping and anti-subsidy laws and rules of origin requirements.

 

Reuters

Stellantis has reversed its remote work policy for auto engineers and now requires them to be back in the office. The company's CEO, Carlos Tavares, had previously championed remote work to cut expenses. “It's impossible to engineer vehicles remotely,” said Ned Curic, who heads engineering and technology at Stellantis. “You have to have people together. You have to do design sessions, engineering sessions and the build-ups together. It helps us accelerate a number of projects.” The company had drastically reduced office space and sold real estate assets as part of its remote work push, and in 2022 said its remote-work policy had become permanent, allowing non-assembly line workers to work from home 70% of the time. “Remote working is very flexible within Stellantis, depending on the need to work more or less often physically together,” a spokesperson for the company said. “There is a delegation to the management to establish the conditions of the best possible performance.”

 

Bloomberg

Some 88% of senior finance professionals believe it is “very important” or “essential” for financial decision making to address the opportunities - and risks – associated with environmental and social issues.

 

Financial Times