Good morning. The European Union has proposed new measures aimed at tightening sanctions against Russia, which has largely succeeded in resisting Western efforts to undermine the Kremlin’s ability to fund its war in Ukraine.

• What's on the table: The EU’s executive body sent a 12th package of Russia sanctions to member states late Tuesday, officials said. Diplomats say it could take several weeks for all 27 member states to adopt the measures, which include restrictions against foreign companies doing business with Russia and a ban on Russian diamond and other imports.
   
• Background on Western sanctions: Since Russia’s February 2022 invasion of Ukraine, Western countries have imposed a range of financial, energy, trade and economic sanctions on Moscow, seeking to weaken its economy and undermine its ability to resupply its troops fighting in Ukraine.
   
• Approach not effective: However, the sanctions haven’t succeeded so far in eroding Russia’s war effort, in part because of their failure to deprive Moscow of a windfall from energy exports. Russia has also found ways to import dual-use goods that it can use for its military.
   
• Putin pushing forward in Ukraine: That helped Russia fend off a Ukrainian counteroffensive over the summer, with Russian forces now on the attack again in a bid to occupy new Ukrainian territory. With Russian President Vladimir Putin poised to wage his war in Ukraine for possibly years to come, making the sanctions on Moscow more effective has become increasingly critical.

FDIC chairman denies being investigated, then changes testimony.

Federal Deposit Insurance Corp. Chairman Martin Gruenberg testified before a House panel Wednesday that he had never been investigated for inappropriate conduct. But the FDIC tapped an external investigator more than a decade ago to examine complaints about his temperament, former officials said.

In a previously scheduled hearing before the House Financial Services Committee that followed a Wall Street Journal report that found a toxic workplace culture at the agency, the panel’s chairman asked Gruenberg, “Since you’ve run the agency, you’ve been there for 20 years, have you ever been investigated for inappropriate conduct during your time at the FDIC?”

“No, Mr. Chairman,” Gruenberg replied under oath, as he shook his head.

When the hearing returned from a break, after the Journal contacted the FDIC for comment, Gruenberg told lawmakers he wanted to correct the record. “In 2008, I was interviewed pursuant to a review done in response to a concern raised by an employee and I’m not aware of anything that came out of that review,” he said.

• FDIC Chair, Known for Temper, Ignored Bad Behavior in Workplace

New York regulator adopts higher standards for coin listings and delistings

New York’s financial regulator is asking cryptocurrency companies regulated in the state to be more transparent about how they list and delist crypto coins.

The New York State Department of Financial Services on Wednesday said it adopted guidance the agency proposed in September. That guidance set the regulator’s expectations for how crypto firms evaluate a coin offering before adoption and the steps and criteria a crypto firm must consider before delisting a coin.

—Mengqi Sun

• The Supreme Court’s new ethics code has been welcomed by critics as a move in the right direction, but they also see it as a mostly symbolic gesture meant to address the court’s low approval rating.
   
• UBS Group won’t have to pay around $2 billion after the French Supreme Court partly overturned a decision from a lower court that had fined the bank in a long-running tax-fraud case, but confirmed a ruling that the bank had helped wealthy clients in France evade taxes.
   
• Internet service providers will have their business practices scrutinized for “digital discrimination” based on income or race under a regulation that was adopted Wednesday by the Federal Communications Commission.
   
• The attorney general of New York has filed a lawsuit alleging PepsiCo’s production of single-use plastic is polluting the Buffalo River.
   
• Meta Platforms will let political ads on Facebook and Instagram question the legitimacy of the 2020 U.S. presidential election, one of several changes the social-media company and other platforms have made to loosen constraints on campaign advertising for 2024.
   
• The judge overseeing the racketeering case against former President Donald Trump and 14 remaining co-defendants said he would soon place new limits on how evidence should be handled, after a defense lawyer admitted to disclosing video clips of witness interviews to a media outlet.
   
• The prosecutor investigating why classified documents ended up at President Biden’s home and former office is preparing a report that is expected to be sharply critical of how he and his longtime aides handled the material, but the probe isn’t likely to result in a criminal case.

The elusive soft landing is coming into view.

The U.S. economy is approaching what most economists had thought either unlikely or impossible: inflation returning to its prepandemic norm without a recession or even much economic weakness, a so-called soft landing.

“What we are expecting now is a soft landing,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. “We expect the economy to weaken quite a bit, but it does look like we’ll avoid an outright contraction” in gross domestic product.

• The Global Fight Against Inflation Has Turned a Corner
• U.S. Retail Sales Fall for First Time Since March as Holiday Season Approaches

Biden, Xi Jinping dial back rancor in summit to stabilize ties.

President Biden and Chinese leader Xi Jinping struck a less contentious tone at their summit Wednesday, a reset that will be quickly tested by deep U.S.-China disagreements.

With relations between the two countries near a low point, Biden and Xi agreed to resume communications between their militaries, cooperate on choking off fentanyl production and begin a dialogue on the risks of artificial intelligence. Their four hours of talks at a secluded estate outside San Francisco included a walk in the wooded grounds.

“We made real progress,” Biden said in a tweet. The talks, he later told reporters, were “some of the most constructive and productive conversations we’ve had.”

• China’s Xi Draws Standing Ovation From U.S. Business Leaders—and Some Doubts

• Congressional shutdown brinkmanship is taking a break, but it could be back with a vengeance soon.
   
• Swelling deficits and weak investor appetite for long-term U.S. debt are pushing the Treasury Department to get more creative with how it borrows. Markets are thrilled—but the approach comes with risks.
   
• Taiwan’s two largest opposition parties reached a deal to collaborate in a pivotal election scheduled for early January that has major ramifications for Taiwan’s future and U.S.-China relations.
   
• The nation’s air-traffic-control system faces increasing hazards from short staffing, outdated technology and chronic underfunding, according to a federal report.
   
• Brett McGurk, National Security Council coordinator for the Middle East and North Africa, met with Israeli and Palestinian leaders at the start of a visit to the region that is part of the Biden administration’s efforts to prevent the conflict in Gaza from spiraling into a broader regional war.
   
• It was one of very few economies to get a boost from the Covid-19 pandemic. That unusual dividend is now unraveling, in a fresh blow to Europe’s already weakened growth outlook.

Cyber experts worry AI could create a world of haves and have-nots.

Cybersecurity experts said that the growing sophistication of artificial-intelligence systems could create a new poverty line for cyber, where companies that can afford to research and develop the technology end up better protected against hackers than those that cannot.

Security chiefs and vendors say AI systems, and in particular generative AI, may offer significant benefits for defending against hacks. Yet, experts worry that the promise of AI won’t be available for everyone, and especially those without deep pockets.

• Israel released footage from Gaza’s largest hospital on Wednesday that it said proved the site was being used by Hamas militants, after searching buildings in an operation that carries high stakes for both sides of the war.
   
• Ukrainian marines slip across the Dnipro River at night in small groups to reinforce a growing contingent of troops engaged in a daring operation to reinvigorate Kyiv’s military efforts in the occupied south.
   
• Iran continued to expand its nuclear program, including its stockpile of near-weapons-grade enriched uranium in recent months.
   
• Ernst & Young executives selected the head of its Americas financial services business as the new global chair to succeed Carmine Di Sibio, the architect of the failed split of its audit and advisory businesses.
   
• Business technology leaders are expecting their cloud spending to grow in 2024, an increase linked in part to the growth of new generative artificial intelligence services.
   
• John Paulson made a fortune on Wall Street betting the housing market would collapse. His reinvention as a property tycoon opening Puerto Rico to the wealthy is proving trickier.

Follow us on X at @WSJRisk. Follow Risk & Compliance editor David Smagalla @DSmagalla_DJ and reporters Mengqi Sun @_MengqiSun, Dylan Tokar @dgtokar and Richard Vanderford @VanderfordRich.

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