Good morning. NatWest displayed "serious failings" when it closed the accounts of controversial Brexit campaigner Nigel Farage, a review ordered by the U.K. bank found.

• Statement from chairman: "Although Travers Smith confirm the lawful basis for the exit decision, the findings set out clear shortcomings in how it was reached as well as failures in how we communicated with him and in relation to client confidentiality," NatWest Chairman Howard Davies said Friday.
   
• Background: In July, NatWest dropped Farage as a client of Coutts, its subsidiary catering to the rich. Farage said he had been ditched for his pro-Brexit and anti-woke views, and the closure engulfed the bank in a political drama. NatWest's then-chief executive, Alison Rose, stepped down shortly afterward, having discussed the matter with a journalist.
   
• Comment from regulator: The U.K.’s Financial Conduct Authority said the report highlighted what it called potential “regulatory breaches” at NatWest and Coutts. “We confirmed to both firms that we are now reviewing how the firms’ governance, systems and controls are working to identify and address any significant shortcomings,” the regulator said in a statement. It said it has been intensifying supervisory work on them since the events.

From Hamas to North Korean nukes, cryptocurrency Tether keeps showing up.

Tether, the $84 billion so-called stablecoin bridging the worlds of cryptocurrencies and the dollar, is increasingly showing up in investigations tied to money laundering, terror financing and sanctions evasion, reports The Wall Street Journal's Ben Foldy.

Tether is now the world’s most heavily traded cryptocurrency by volume. The stablecoin, also known as USDT, maintains a 1:1 exchange ratio with the dollar. Traders use it to stash their cash, easily invest in other cryptocurrencies or swap it into traditional currencies such as the dollar.

Another use for tether seems to be in illicit finance, according to indictments, blockchain analysis and sanctions notices. In the past year, the cryptocurrency appears to have been used in financing Hamas, paying Chinese fentanyl suppliers, funding the North Korean nuclear program and helping buy sanctioned Venezuelan oil for sanctioned Russian oligarchs.

• Abercrombie & Fitch was accused in a lawsuit of enabling former chief Mike Jeffries to run an alleged sex-trafficking operation for years.
   
• Sam Bankman-Fried made a direct appeal to jurors who will decide his fate, testifying Friday that he made mistakes large and small while running crypto exchange FTX but didn’t defraud customers out of billions of dollars.
   
• After a $40 billion cryptocurrency crash, Do Kwon hopscotched across Asia and Europe to evade authorities. 
   
• A researcher at Two Sigma Investments adjusted the hedge fund’s investing models without authorization, the firm has told clients, leading to losses in some funds, big gains in others and fresh regulatory scrutiny.
   
• TikTok is asking managers across the world to give more employees lower ratings in performance reviews, a move that staff fear could reduce bonuses and lead to layoffs, people familiar with the matter said.

SodaStream built a factory for Israelis and Palestinians to work together. Then a war erupted.

In a factory in Israel not far from the Gaza border, Jews and Arabs have for years worked side by side making SodaStream seltzer machines for homes around the world.

Together, the colleagues feasted at Ramadan and lighted candles for Hanukkah. They visited one another’s homes and attended the weddings and funerals of their co-workers’ family members. Throughout past conflicts in the region, they have called their workplace an “island of peace.”

That harmony is now being tested.

• Israel Makes Major Advance Toward Gaza City
• Elon Musk’s Outlook on Our Future Turns Dour
• Antisemitic Comments Increase Across Chinese Social Media

U.S. worries about escalation in Pacific as Chinese military steps up confrontation.

China’s jet fighters are harassing American military aircraft and stepping up sorties around Taiwan. Its coast guard is confronting a U.S. security treaty ally in the South China Sea, leading to a recent collision.

Amid the tensions, talks between the U.S. and Chinese militaries remain largely frozen, which leads Washington to worry that a misstep could trigger a dangerous escalation.

• China, U.S. Look to a Biden-Xi Summit While Wrestling Tensions
• Hong Kong, Facing an Exodus, Offers Money for Babies

• Since Federal Reserve officials last raised interest rates in July, the economy is doing two things that central bankers don’t think it can sustain much longer: revving up activity and at the same time slowing inflation. It has set off a debate within the central bank about how closely it should follow its traditional models of the economy.
   
• Toyota needed software expertise, but making a startup mentality mesh with an 86-year-old giant proved challenging. Now it’s trying a new way.
   
• The decision by the United Auto Workers on Saturday to call a fresh strike at General Motors as talks appeared to be nearing a conclusion was the latest in a set of unexpected moves by the union, which has used misdirection and maximized publicity to keep companies off balance.

• Americans’ prolonged spending spree has confounded economists and resulted in a surging U.S. economy. What’s keeping their feet off the brakes?
   
• One of the hottest investments on Wall Street is something of a surprise—it’s a battered long-dated Treasury bond fund.
   
• The Biden administration wants to impose new requirements on insurers that it says would reduce out-of-pocket costs for mental-health care and substance-use-disorder treatment. The insurance industry is firing back, arguing the proposal would drive up prices and set impossible-to-meet standards.
   
• A 29% hike proposed by Wyoming's largest utility has residents and local leaders up in arms. Many in the state, which leads the nation in coal production, are aiming their fury at renewable power.
   
• David Siegel went to work for an affiliate of Guaranteed Rate in 2021 and got a signing bonus of more than $100,000. Interest rates were super low, and mortgage bankers were raking in cash. Now that business has dried up, the mortgage company wants its money back.

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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