By Jack Kelly
Twitter was hacked yesterday in a blatant bitcoin scam.
Reports allege that hackers gained access to “blue check” accounts with the help of insiders—employees who were possibly paid off. The hackers took control over accounts that belonged to high-profile people, including Barack Obama, Joe Biden, Elon Musk, Kim Kardashian, Bill Gates, Kanye West, Michael Bloomberg and others. They used these accounts to allegedly perpetrate a bitcoin-related scam. The U.S. Federal Bureau of Investigation is leading a federal inquiry into the Twitter hacking.
This is disturbing on many fronts. It exposes a glaring weakness in Twitter’s security systems and the vulnerability of employees to succumb to nefarious outside bad actors.
Instead of a sloppy attempt at a scam, the hackers could have taken over President Donald Trump’s account and tweeted about a war or nuclear attack. This attack makes clear that Twitter needs to immediately figure out what happened and put into place fail-safe systems to ensure that future attacks—especially those that could cause great economic, financial or physical destruction—won’t happen again.
Separately, according to CNN , United States lawmakers are calling on Robinhood—the popular stock trading app used by young people—to improve safeguards in the wake of a suicide of 20-year-old student Alex Kearns, who is believed to have had a $730,000 trading loss in his account. Lauren Underwood, the Congressperson for Kearns’ district, said, “This should have never happened.”
Representative Underwood wrote a letter, co-signed by state Senators Dick Durbin and Tammy Duckworth, to Robinhood expressing “serious concerns” over a “lack of safeguards” at the company.
Robinhood’s spokesperson said, “We take our responsibility to our customers seriously and will work with the Representatives and Senators to address their questions and concerns.”
“We are personally devastated by this tragedy,” Vlad Tenev and Baiju Bhatt, Robinhood’s co-CEOs, wrote in a blog post.
Robinhood has become the home of a new wave of day traders taking advantage of the 40% increase in the stock market since the pandemic lows. They’ve taken on a “pile-on” approach to investing. Thousands of mostly Millennial day traders crowd into specific low-priced stocks. There are some who brag about big scores and reports of those who lost small fortunes.
Speaking of failures, the iconic American retailer J.C. Penney that previously filed for bankruptcy protection said on Wednesday that it would cut about 1,000 jobs and shutter 152 stores, as the department store chain seeks to emerge from Chapter 11.
While the company blames Covid-19 for its failures, it’s a little more complicated. Turnover in the C-suite, failure to compete with online death star Amazon, losing touch with its core customers and other bad decisions inflicted self-harm on the 100-plus-year-old retailer that made it too weak to withstand its forced closure during the pandemic. But, not to worry, the executives were paid millions.
There are a lot of losses around. Three of the largest U.S. banks said on Tuesday they had set aside a whopping $28 billion for loan losses from their customers. This foreshadows what pain may lie ahead. As over 51 million Americans are out of work, many families can’t pay their rent, mortgages or meet loan payments, the banks could see major defaults on their loans. This could end very badly for everyone involved. JPMorgan CEO Jamie Dimon ominously said on a call with journalists, “The recessionary part [will come later].”
Coincidentally, JPMorgan and Citigroup each reported huge second-quarter profit declines on Tuesday, while Wells Fargo posted its first loss since 2008.
Some of the big banks, like Goldman Sachs and Morgan Stanley, were able to offset their loan woes with huge gains in stock and bond trading activities.
The unprecedented multitrillion-dollar government stimulus, plus the Federal Reserve printing money around the clock, has created an historic disconnect between the financial markets and the economy. The stock market is doing amazingly well, while Americans are hurting.
According to the Wall Street Journal, Goldman Sachs kicked ass trading and capitalized on the misery and market chaos (okay, they didn’t actually say “kicked ass.” I added this to make something boring sound not-so-boring). Its traders and investment bankers posted near-record revenue. Goldman CEO and part-time DJ (yup, I’m not making this up) David Solomon said, “We became super busy because our clients were super busy.” He managed expectations by saying, “I don’t necessarily view that as permanent.”
Not to be outdone by its arch rival, Morgan Stanley posted a record quarterly profit on trading gains. The two trading powerhouses— Morgan Stanley and Goldman Sachs—performed better than Main Street losers JPMorgan Chase, Bank of America and Citigroup, which were weighed down by their stodgy retail banking businesses.
Last week, United Airlines informed its employees that about half of them—around 36,000 people—will not have jobs after October 1. Not to be outdone, American Airlines said on Wednesday that it will warn 25,000 frontline employees of possible furloughs and layoffs—nearly 20% of the company’s workforce of 130,000. Evidently, people are reluctant to fly in sealed tin cans that breed germs.
Here’s something virtuous: Verizon hasn’t laid off any of its 135,000 employees during the pandemic. Instead, the company has retrained around 20,000 workers for new careers.
Verizon pledged to help and retrain lower-wage people for jobs of the future through skills training and job advancement tools.