Good morning. The biggest U.S. banks are going to have to demonstrate they haven’t gotten so large that they are unwieldy, or face a potential breakup, Acting Comptroller of the Currency Michael Hsu told Risk & Compliance Journal's Richard Vanderford.

• Taking on 'too big to manage': Hsu, in his role as one of the nation’s top banking watchdogs, has been a risk evangelist, warning institutions to take stock of issues ranging from climate-related risk to antiquated computer systems. Now he has set his sights on banks that have grown so big they struggle to effectively address all the issues they face, a problem he calls “too big to manage.”
   
• Big banks told to step it up: The Wall Street Journal’s Risk & Compliance Journal spoke to Hsu, who said he expects the largest banks to show they are on top of their problems—or else. “The burden is on them,” Hsu said.

China restricts exports of metals used in high-performance chips.

China set export restrictions on two minerals the U.S. says are critical to the production of semiconductors, missile systems and solar cells, a show of force ahead of economic talks between two rivals that increasingly set trade rules to achieve technological dominance.

The minerals—gallium and germanium—and more than three dozen related metals and other materials will be subject to unspecified export controls starting Aug. 1, Beijing’s Ministry of Commerce said Monday.

• China’s Chip Industry Braces for Further Sanctions With Defiance
• New Controls Prompt Countries to Explore Supply-Chain Diversification

SEC announces no-penalty settlement with California window manufacturer.

Along with toughening up on enforcement, the U.S. Securities and Exchange Commission is rewarding companies that voluntarily disclose securities law violations.

The SEC on Monday announced a no-penalty settlement with View Inc. after the California-based window manufacturer failed to disclose $28 million in estimated liabilities stemming from a defect in its windows.

The regulator said it decided not to impose civil penalties against View because the company reported the violations to the SEC and took remedial measures. The SEC said it would bring civil claims against View’s former finance chief for his failure to ensure the liabilities were disclosed.

The no-penalty settlement is the SEC’s second in recent weeks, following a similar deal with toolmaker Stanley Black & Decker after that company failed to disclose perks it provided to certain employees.

• The Biden administration is preparing to restrict Chinese companies’ access to U.S. cloud-computing services, according to people familiar with the situation, in a move that could further strain relations between the world’s economic superpowers.
   
• The Federal Trade Commission has issued a long-anticipated update to its guidelines for endorsement, which advise businesses about how to make sure consumers understand when celebrities, influencers or even regular consumers are compensated to promote or review their products.
   
• Meta must get user consent before sending personalized ads in certain circumstances, the European Union’s top court ruled.
   
• Crypto giant Binance opened a regional headquarters in Paris last year, hoping to expand its business in Europe. Things haven’t gone its way.
   
• A federal judge issued a broad preliminary injunction limiting the federal government from communicating with social-media companies about online content, ruling that Biden administration officials’ policing of social-media posts likely violated the First Amendment.
   
• British banks have found themselves in the center of a debate over free speech, after the U.K. government expressed concern that they were black-listing customers who express controversial views.

U.S., China start talking again, with global economic order at stake.

Washington and Beijing are talking again. The test now is whether they can settle into a new normal that avoids upending the global economy—or fall back into a cycle of acrimony and retaliation.

Rising tensions. Treasury Secretary Janet Yellen heads to China on Thursday through Sunday to meet with senior government officials, her department said. The trip comes as tensions over trade, technology and Taiwan prompt both countries to reconsider the deep commercial and investment ties that have defined the relationship for decades. Yellen is hoping to preserve many of those links, while Chinese officials want to reverse a domestic slowdown by showing they remain open for business from the West.

Labor market headfake? Key report could be overestimating job growth.

On its face, the economy looks strong. Output grew 2% annualized in the first quarter, and employers have boosted payrolls by 1.6 million so far this year, about 2.5% annualized—nearly twice the average increase in 2019.

But some economists say the job market might actually be weaker, and the economy closer to recession, than those figures imply. The reason: quirks in how the payroll data are calculated.

• Meta is in talks with Tencent to bring Meta’s Quest VR headset to a huge new market, but potential partners worry about Zuckerberg’s past criticisms of China.
   
• Pain from the anemic return to the office is spilling over into architecture, construction, cleaning, brokerage, furniture and other industries that depend on thriving downtowns.
   
• In his first meeting with key foreign allies since an aborted mutiny challenged his leadership last month, Russian President Vladimir Putin sought to reassure Asian leaders that he remains firmly in charge at home.
   
• Canadian oil companies have poured billions of gallons of toxic waste into vast reservoirs spread across the boreal forests of Alberta. To permanently dispose of the wastewater, they want to pump it into a nearby river.

Biotech CEO gets hands-on after cyberattack to protect business.

Werner Lanthaler rushed to the office the Friday before Easter after learning his biotech company Evotec had been hacked. The chief executive met with senior leaders, formed a crisis team and decided to shut down Evotec’s information-technology systems.

The drug discovery company’s business was at stake. Hamburg, Germany-based Evotec has more than 500 partners, including pharmaceutical and other biotech companies like Bayer, Bristol-Myers Squibb and Novo Nordisk.

Lanthaler knew ransomware could easily spread, encrypting or exposing business partners’ data. “It was maybe a 20-second discussion,” he said. “Shutting down was the only way to really protect our business model in the long run.”

• Twitter’s challenges escalated, as competitors capitalized over the holiday period on user frustration with Elon Musk’s decision to limit how many tweets users of his platform can see. The biggest competitive threat emerged from Meta Platforms, which tipped plans to launch a Twitter rival on Thursday dubbed Threads.
   
• In more than a dozen developing countries where the U.S. believes police agencies are so riddled with corruption that they can’t be trusted, American embassy personnel handpick their own local law-enforcement units, screen them for misconduct and, to a large degree, assign them missions aligned with U.S. interests.
   
• Russia is in contact with the U.S. regarding prisoner swaps, a Kremlin spokesman said, after consular visits to Wall Street Journal reporter Evan Gershkovich detained in Russia and a Russian held in the U.S.
   
• A trio of bank failures earlier this year put mergers back on the agenda in corporate boardrooms and meetings with regulators. Turning all of that talk into action won’t be easy.
   
• Workers in unexpected jobs are clocking more time from home than before the pandemic hit.

Follow us on Twitter 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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