Good morning. The Federal Reserve’s banking supervisors failed to take forceful action to address growing problems at Silicon Valley Bank before it collapsed last month, the central bank’s top regulator said, signaling a broad push to toughen rules on the industry.

• The findings: Michael Barr, the Fed’s vice chair for supervision, said supervisors didn’t fully appreciate the extent of the vulnerabilities as SVB grew in size and complexity. When supervisors did find risks, they didn’t take sufficient steps to ensure the firm fixed those problems quickly enough, he said in a report Friday.
   
• The background: Regulators took control of Santa Clara, Calif.-based SVB on March 10. The collapse sparked a panic that led to the failure of New York-based Signature Bank and an intervention by financial regulators to protect uninsured depositors at both banks. The Fed supervised SVB and the Federal Deposit Insurance Corp. supervised Signature.
   
• Signature Bank problems: The FDIC issued a separate report Friday analyzing its oversight of Signature, which failed two days after SVB. The FDIC said that it was slow to escalate issues that it had identified with the bank’s management. It put much of the blame on Signature, which it said grew too fast and wasn’t responsive enough when the FDIC raised concerns.

The Risk & Compliance Forum on May 9 will feature speakers including Glenn Leon, chief of the fraud section at the Justice Department, Assistant Secretary for Export Enforcement Matthew Axelrod, Elizabeth Atlee, chief ethics & compliance officer at CBRE and Sidney Majalya, chief risk officer at Binance.US. You can register here.

Google loses bid to escape DOJ’s digital-ad antitrust case.

Alphabet Inc.’s Google lost an early bid to escape a Justice Department antitrust lawsuit that seeks to break up the company’s business brokering digital advertising across much of the internet.

Case pressing ahead. U.S. District Judge Leonie Brinkema denied Google’s request to dismiss the case, finding that the Justice Department’s complaint filed in January was sufficiently detailed to proceed.

• A federal judge in Connecticut on Friday threw out criminal charges against six aerospace-industry executives accused of agreeing to not poach one another’s employees. 
   
• Italy’s privacy regulator rescinded its temporary ban on ChatGPT after the chatbot’s developer, OpenAI, implemented changes demanded by the regulator.
   
• Canadian legislation to compel digital platforms such as Alphabet Inc.’s YouTube and Bytedance Ltd.’s TikTok, along with streaming services like Netflix Inc., to prominently showcase Canadian programming to users in this country received final parliamentary approval on Thursday.
   
• Steep taxes and heavy regulation are making it hard for licensed pot sellers to operate in some states, driving more producers and buyers to illegal outlets.

First Republic Bank Is Seized, Sold to JPMorgan in Second-Largest U.S. Bank Failure.

Regulators seized First Republic Bank and struck a deal to sell the bulk of its operations to JPMorgan Chase & Co., heading off a chaotic collapse that threatened to reignite the recent banking crisis. 

On the edge. The San Francisco-based bank, the second-largest to fail in U.S. history, lost $100 billion in deposits in March following the collapse of fellow Bay Area lender Silicon Valley Bank. It limped along for weeks after a group of America’s biggest banks came to its rescue with a $30 billion deposit. Those deposits will be repaid after the deal closes, JPMorgan said.

New York regulator flags liquidity risk models in Signature Bank postmortem.

The way that banks model liquidity risk—that is, the uncertainty surrounding their ability to access ready cash when needed—should be looked at, the New York State Department of Financial Services said Friday in a report on the collapse of Signature Bank. The bank was taken under regulatory control after depositors withdrew their money en masse in the wake of the collapse of Silicon Valley Bank.

Under something known as the liquidity coverage ratio, banks are required to be able to satisfy total expected cash outflows over a 30-day period while in a stressed scenario. The rule is meant to use conservative assumptions, but Signature clients made withdrawals at rates that far outpaced those assumptions, NYDFS said. The model assumptions haven’t kept pace with technological advancements in mobile banking or consumer behavior, it said.

• The detention of a veteran Japanese executive at Astellas Pharma Inc. is one of a string of events that have sparked new concerns among foreign companies about the safety of their staff and the reliability of Beijing’s pledges that China is open for business.
   
• Meanwhile, dozens of Chinese military aircraft and navy vessels were detected around Taiwan early Friday, including one that flew around the island, Taipei’s Ministry of National Defense said.
   
• The United Nations atomic energy agency is racing to prevent Russia’s war in Ukraine from endangering the Zaporizhzhia nuclear plant, Europe’s largest, as fighting nearby intensifies.
   
• Wage growth stayed elevated to start the year and inflation remained high, likely keeping Federal Reserve policy makers on track to raise rates again this week.
   
• Companies are trimming and streamlining their information technology spending amid worries about a possible recession later this year.
   
• President Recep Tayyip Erdogan said Islamic State’s top leader died during a Turkish intelligence operation in what would be the extremist group’s third chief to be killed in less than a year and a half.

• China’s party-state, long steeped in secrecy, is creating a black box around information on the world’s second-largest economy, alarming global businesses and investors.
   
• House Speaker Kevin McCarthy won the preliminary round in his effort to lead Republicans into debt-ceiling negotiations. Next comes the main event.
   
• The nation’s spy chief, a longtime college president and top women in finance. The circle of people who associated with Jeffrey Epstein years after he was a convicted sex offender is wider than previously reported, according to a trove of documents that include his schedules.
   
• Months after Russia dialed up its offensive in the eastern Donetsk region, the Kremlin is still searching for something to call a victory.
   
• President Biden and others at an annual Washington dinner called for the release of jailed Wall Street Journal reporter Evan Gershkovich in Russia during a gathering that brought together members of the media and government officials to celebrate press freedom.