Good morning. UBS agreed to pay U.S. and U.K. regulators around $390 million in fines related to the investment firm Archegos Capital Management, whose collapse hammered Credit Suisse, a rival it acquired earlier this year.

UBS completed its rescue of Credit Suisse in June, a merger forced on it by Swiss regulators after the smaller rival lost the confidence of clients and investors.

• Findings: Credit Suisse engaged in “unsafe and unsound counterparty credit risk management practices” related to its dealings with Archegos, the Federal Reserve said.
   
• Background: The sudden unraveling of Archegos in March 2021 triggered more than $10 billion of losses across Wall Street trading desks. None was hit worse than Credit Suisse, which took more than $5 billion in damage.
   
• Risk management practices questioned: An investigation commissioned by the Credit Suisse board detailed how the bank for years granted Archegos special dispensation to avoid rules meant to protect the bank. It ignored staff warnings before the family investment firm’s collapse and said parts of the bank had a “lackadaisical attitude towards risk and risk discipline.”
   
• Reaction at UBS: UBS said it already is addressing the regulatory findings across Credit Suisse, and “will implement its operational and risk management discipline” across the combined bank.

FDIC scolds banks for manipulating deposit data.

When Silicon Valley Bank ran into financial trouble, its customers ran for the exits because most of their deposits weren’t insured. In the weeks after, dozens of banks tweaked their numbers to reduce the portions of their deposits that they said were uninsured.

Warnings issued. On Monday, the Federal Deposit Insurance Corp. sent a warning to U.S. banks not to take liberties with their deposit numbers. A Wall Street Journal analysis of the banks’ filings with the FDIC shows that Bank of America and Huntington National Bank had among the biggest revisions to their uninsured-deposit numbers.

• For one of his newest anticorruption campaigns, Chinese leader Xi Jinping is ordering his enforcers to dig up dirt. This time, he means, literally, the kind in the ground.
   
• The Biden administration is discussing lifting sanctions on a Chinese police forensics institute suspected of participating in human-rights abuses, people familiar with the matter said, in a bid to secure Beijing’s renewed cooperation in fighting the fentanyl crisis.

Why the Fed isn’t ready to declare victory on inflation.

Uncertainty over the path of inflation later this summer makes it hard to predict the Federal Reserve’s next steps following a likely quarter-percentage point increase in interest rates this week.

Unsure of the path forward. Some Fed policy makers and economists are concerned that the easing in inflation will be temporary. They see inflation’s slowdown as long overdue after the fading of pandemic-related shocks that pushed up rents and the prices of transportation and cars. And they worry underlying price pressures could persist, requiring the Fed to lift rates higher and hold them there for longer. Other economists say that thinking ignores signs of current economic slowing that will gradually subdue price pressures.

• Bank regulators are taking a page from their playbook of the 2008-09 financial crisis to help lenders weather the approaching tidal wave of troubled commercial real-estate loans.
   
• Livestock and crops are sweltering under high temperatures across much of the U.S., adding to the agriculture industry’s costs and threatening production.
   
• Airstrikes between Russia and Ukraine escalated sharply Monday, with Russia attacking a Ukrainian grain terminal on the border with Romania, while Ukraine unleashed a wave of drones on Moscow and Crimea, Russian officials said, hitting an arms depot on the Black Sea peninsula.

• Elon Musk rolled out a new X logo on Twitter after saying its signature blue bird will fly away.
   
• Israel’s Parliament passed a divisive judicial overhaul, defying months of protests and plunging the country further into a political crisis that has exposed rifts over its identity and raised fears about its national security.
   
• IPO investors have moved from a fear of losing money to a fear of missing out.
   
• Weight stigma is rarely talked about at work, but it pervades workplaces everywhere, employees and hiring managers say.
   
• The pandemic-era pay cuts that swept across many C-suites are now a regular part of some companies’ road maps for tough times.

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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