Good morning. Banking regulators are scrutinizing whether index-fund giants BlackRock, Vanguard and State Street are sticking to passive roles when it comes to their investments in U.S. banks.

• How much is at stake? The three firms manage more than $23 trillion in total, with much of it in funds that passively mimic indexes such as the S&P 500.
   
• The issue: BlackRock and Vanguard each hold more than 10% of the shares at many banks, a threshold that normally determines whether an investor is assumed to have a controlling interest in a lender, while State Street also holds a number of sizable stakes. Regulators have an interest in policing who owns and controls banks because of their special role in the economy.
   
• The rules: At present, regulators in effect exempt the biggest asset managers from a host of onerous banking rules—such as needing permission when they acquire shares above the 10% threshold—as long as the firms remain passive. That means they shouldn’t exert influence on management or boards, including by imposing political views, though they can vote in shareholder elections.
   
• What could happen: The existing approach could soon change, spurred by members of the Federal Deposit Insurance Corp. One board member, Jonathan McKernan, told The Wall Street Journal he has developed a plan to enhance the FDIC’s monitoring of the firms and hopes it will receive a vote from the board over the coming weeks. He is pressing for an order to pause the firms’ investments in FDIC-regulated banks above the 10% threshold while the agency examines the matter.

U.S. to impose two-person crew mandate on freight trains.

Federal officials are planning to impose a mandate that freight railroads operate trains with two-person crews, adopting a policy that railroads have opposed and Congress failed to legislate.

The Department of Transportation and Federal Railroad Administration said Tuesday that the train crew size rule is long overdue and ensures nationwide uniformity in rail operations, rather than having states create a patchwork of rules. The Wall Street Journal earlier reported on the agencies’ plans to implement the rule.

• Two independent board members of Warner Bros. Discovery resigned after the Justice Department told them it was investigating whether their presence on the board violated antitrust laws.
   
• Elon Musk’s social-media platform X named a new head of safety as the company tries to rebuild relationships with advertisers.

Bitcoin is soaring this year. Goldman’s crypto skeptic isn’t biting.

Sharmin Mossavar-Rahmani, the chief investment officer of Goldman Sachs Wealth Management, remains skeptical of cryptocurrency, even as bitcoin has soared 64% this year to nearly $70,000. Her position puts her at risk of costing Goldman clients potential gains while appearing out of step with markets. 

Some financial advisers have also begun advising clients to include crypto in their portfolios. Mossavar-Rahmani couldn’t care less what the others do.

“We do not think it is an investment asset class,” she said in an interview, comparing the recent crypto enthusiasm to the tulip mania of the 1600s. “We’re not believers in crypto.”

• The airstrike that killed top Iranian military officials in Syria on Monday threatened to put Israel into open conflict with Iran, illustrating how the countries’ long-simmering shadow war has entered a dangerous new phase.
   
• In his first call with Chinese President Xi Jinping since their November summit, President Biden raised mounting concerns over Beijing’s substantial support for Russia’s defense industry, the White House said Tuesday.
   
• Almost a decade ago, Ma Ying-jeou became the first Taiwanese leader to meet his Chinese counterpart one-on-one since 1949. On Monday, with the relationship in free fall, Ma embarked on an unusual visit to China—which could include a reunion with Chinese leader Xi Jinping in Beijing—with the aim of repairing frayed ties.
   
• The yen faces rising risks of intervention by Japanese authorities as it approaches the psychologically important 152.00 level against the U.S. dollar, but the impact of any actions could be short-lived.

• Israel struggled to contain a growing crisis after a strike by its military killed seven aid workers in Gaza, drawing condemnation from around the globe.
   
• Boeing factory logs indicate missed procedures, confusion and delays during the production of the jet that later burst open in flight.
   
• Late-night host Jon Stewart said Apple asked him not to interview Federal Trade Commission Chair Lina Khan when he was hosting a show and podcast on Apple TV+.
   
• Forget black-tie dinners or summits at picturesque locales. The irascible leaders of some of Latin America’s biggest countries are instead taking a decidedly disdainful approach to diplomatic relations.
   
• Tesla reported its first year-over-year decline in quarterly deliveries since 2020, stoking further concern about the company’s growth prospects this year.

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.

You can reach us by replying to any newsletter, or email David at david.smagalla@wsj.com.