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Twitter begins phasing out legacy 'blue check marks' in latest platform change

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(NEW YORK) -- Starting April 1, Twitter users who don’t subscribe to Twitter Blue are going to have to say goodbye to their blue check marks.

Recent changes implemented under Elon Musk, the company’s CEO, mean anyone who subscribes to Twitter Blue gets a blue “check” icon next to their profile. But that wasn’t always the case.

Twitter’s check marks were originally intended to verify the authenticity of prominent accounts. “Blue Checks” appear next to the names of many high-profile celebrities, politicians, journalists, activists and organizations.

“This is a person that the powers that be at Twitter decided is important in some way,” Amanda Silberling, a senior culture reporter at TechCrunch, said about the original check mark status.

In addition to cutting down on scam accounts, Silberling told ABC Audio the checks came to convey a sense of legitimacy on the platform.

“I think in some ways it is a status symbol,” said Silberling. “I was very excited when I got my blue check … people are noticing what I’m doing as a journalist, that makes me feel good.”

Hear ABC Audio's Mike Dobuski report:

Following a revamp of Twitter Blue last year, now any user who pays a monthly subscription fee automatically gets a check mark – regardless of the relevancy of the account. For months now, new Twitter Blue subscribers enjoyed verified status alongside the “legacy” blue check accounts. But starting in April, the company said any existing blue check accounts that don't subscribe to Twitter Blue will have to pay up – or lose the check.

“Starting April 1, 2023, we’ll begin winding down our legacy verification program,” reads Twitter’s help page. It goes on to detail the process by which users can receive a blue check. Accounts must be older than 30 days, for example. They also “may not impersonate individuals, groups or organizations to mislead, confuse or deceive others, nor use a fake identity in a manner that disrupts the experience of others on Twitter.”

Musk said charging for verification is part of an attempt to cut down on automated spam accounts, known as “bots.” In a recent tweet, Musk wrote that “paid account social media will be the only social media that matters.”

At the same time, Twitter has rolled out additional gray and gold check marks, intended to verify government and business accounts. The official White House Twitter account, for example, currently displays a gray check mark. ABC News, meanwhile, has a gold check.

But Silberling says tying blue checks to payment still leaves the door open to impersonation and misinformation on the platform.

“The blue check is essentially just going to lose its meaning,” she said, adding that users now bear more responsibility in determining which accounts are real on the platform.

“It’s always a good thing if social media users are aware of what they’re reading, and is it true,” said Silberling. “But also part of the job of social media platforms is to make it more difficult for misinformation to circulate, and I don’t think that Twitter is doing a great job of that right now.”

Copyright © 2023, ABC Audio. All rights reserved.

Amazon union faces division, delay a year after historic victory

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(NEW YORK) -- Encircled by camera-wielding supporters and journalists, Chris Smalls popped a bottle of champagne one year ago today to celebrate a watershed election that established the first-ever U.S. union at Amazon -- but the celebratory times for the union wouldn't last.

Smalls, a former warehouse worker at the company's facility in Staten Island, New York, and the president of the Amazon Labor Union, or ALU, launched the campaign alongside his co-workers, raising money on GoFundMe as they sought improved pay, benefits and working conditions at the facility.

The independent union overcame well-resourced opposition from the company and helped propel a surge of labor organizing across the country, some experts said.

However, the ALU encountered difficulties almost immediately. In the months following the victory, labor campaigns were defeated overwhelmingly in elections at two other Amazon warehouses in New York.

Meanwhile, sharp divisions emerged within the ALU, according to interviews with four current and former workers at the Staten Island facility.

Amazon has also mounted an ongoing legal challenge against the results of the union election, leaving the labor organization far from signing a collective bargaining agreement that it hopes will deliver a base pay of $30 per hour and other improvements at the facility.

The New York Times first reported on the divisions within the ALU.

"No matter how it ends, this was a significant moment," Joshua Freeman, a professor emeritus of labor history at Queens College at the City University of New York. "It contributed to a wave of union organization efforts all over the country."

"Obviously, there have been a lot of bumps in the road since a year ago," Freeman added.

In a statement to ABC News, Amazon Spokesperson Eileen Hards said the company respects workers' right to unionize but it contests the results of the election last year at the Staten Island warehouse, also known as JFK8.

"Our employees have the choice of whether or not to join a union," Hards said. "They always have."

"We strongly disagree with the outcome, and as we showed throughout the JFK8 Objections Hearing with dozens of witnesses and hundreds of pages of documents, both the NLRB and the ALU improperly influenced the outcome of the election and we don't believe it represents what the majority of our team wants," she added.

"They appeal everything and we continue to fight that legal battle," Smalls told ABC News about Amazon's ongoing challenges to the union vote. "It's been ruling in our favor and we don't see it reversing the other way."

The headline-grabbing union victory at Amazon last April accelerated an upsurge of labor organizing that took hold nationwide during the pandemic, as a tight job market and sky-high prices helped fuel activism among workers at high-profile companies like Starbucks and Apple.

Over a yearlong period ending in September, petitions for union representation jumped 53%, NLRB data showed. Moreover, last year labor unions reached their highest level of public support across the U.S. since 1965, a Gallup poll showed.

"Amazon workers took the brave step to unionize a year ago," said Seth Goldstein, a partner at Julien, Mirer, Singla, & Goldstein who represents the ALU. "No one thought that was possible."

After the union victory, however, Amazon filed objections with the National Labor Relations Board seeking to overturn the outcome, including allegations that NLRB officials showed a favorable bias toward the workers and that union leaders bribed colleagues in an effort to win their support.

"Amazon’s abuse of the legal process is simply a stalling tactic that is meant to delay our negotiations and cause workers to lose faith in the process," the ALU said about the allegations in September.

So far, those legal challenges by Amazon have failed. In September, a hearing officer for the NLRB recommended that the vote should stand. A few months later, in January, the NLRB officially certified the ALU, putting Amazon under a legal obligation to bargain in good faith. Amazon appealed the ruling.

Goldstein said he is confident the ALU will ultimately overcome the legal challenge. However, the court battle has delayed the start of negotiations on a collective bargaining agreement between workers and management. And even after negotiations begin, the back-and-forth could stretch on for more than a year before a contract is signed, he added.

"We all knew that this would unfortunately get bogged down," he said. "I'm not surprised -- I'm saddened."

Such delay is typical for a first union contract, but it can fray labor solidarity, some experts said. The average length of time before a new union signs its first contract is 409 days, according to a Bloomberg Law analysis in 2021.

"It's hard to keep a group together if you're not improving their lives in a concrete way," said Freeman, of the City University of New York. "You can do it for a while but at some point people roll their eyes."

While the ALU fights Amazon in court, the union also aims to put pressure on the company through organizing within the Staten Island facility and building support among workers at other warehouses as well as leaders within the wider labor movement, Goldstein said.

However, the visible presence of union support within the Staten Island warehouse has diminished significantly since the victory last year, according to three longtime workers at the facility.

"Right after the election, there were about a dozen people I saw on the first floor wearing ALU t-shirts and yellow 'organizer' vests," Natalie Monarrez, a worker who considers herself pro-union and initially organized with the ALU but ultimately voted against unionization due to concerns regarding its leadership, told ABC News.

"In the past few months, I haven't seen any ALU t-shirts or yellow vests," she added.

Smalls, who has traveled nationwide over the past year to speaking engagements and meetings with Amazon workers at other warehouses, has received criticism from some union activists over a perceived lack of focus on organizing within the Staten Island facility, he said.

"Whenever I'm in town, I meet with workers. I can't organize with them inside the building. I can't hold their hands," Smalls, who was terminated by Amazon in 2020, said. "The requirement of any union president is to travel and amplify the workers. That's exactly what I do."

Smalls was fired after being accused of violating COVID-19 safety protocols, but he has alleged retaliation. Amazon denied that retribution played a role in the firing and said Smalls had received "multiple warnings" for violating social distancing guidelines.

Another sharp divide within the union centers on the governance structure that underlies its decision-making and leadership.

An initial version of the union's constitution, filed with the Department of Labor last June, ordered that the first union elections should take place 60 days after certification of the union, a step that precedes contract negotiations; or in 2024 if the union had yet to be certified by then, according to the document.

However, a new version of the constitution, filed in December, pushed an initial election back to 90 days after the union signs its first contract, the document said. The union may not sign a contract for more than a year, leaving officers, like Smalls, in their current positions without risk of an election challenge.

At a union meeting in December, Smalls offered attendees an ultimatum regarding the new version of the constitution. "If you can't organize by this structure and this document, this ain't for you," he said. "This is the law from here on out." Some members walked out of the meeting in protest.

When asked about the meeting, Smalls said: "No one is above the constitution, including me. They don't want to follow the rules -- there's the door. They chose the door."

Nicole Druda, who began working at the Staten Island facility in 2021, said she voted against unionization in part because she had become disenchanted by a union that represented her at a previous job. But she said she spoke to an ALU organizer in November and began supporting the union this year.

"I really want something that will benefit me as an employee," she said. "And as somebody who wants to be more politically active, this could help workers in general across the country get more of a voice."

Smalls said he expects the union to reach an agreement with Amazon on a first contract within the next year.

"I don't want to do this forever," he added. "I've been laser focused on this. The only thing I have is a contract in my vision -- nothing more, nothing less. A contract for the workers so we can move on to the next thing."

Copyright © 2023, ABC Audio. All rights reserved.

Approximately 53,000 hoverboards recalled over fire risks after two deaths

Jetson Electric Bikes recalls 42-Volt Rogue Self-Balancing Scooters/Hoverboards due to fire hazard. -- CPSC

(WASHINGTON) -- After two deaths, approximately 53,000 hoverboards are being recalled due to fire risks, the U.S. Consumer Product Safety Commission (CPSC) said Thursday.

The voluntary recall impacts certain Jetson Rogue self-balancing scooters -- also known as hoverboards -- which were sold at Target and on the company's website.

CPSC said a 10-year-old girl and her 15-year-old sister died from an April 2022 fire in Hellertown, Pennsylvania. Local officials determined that a 42-volt Jetson Rogue was the point of origin of the fire, according to a news release from CPSC, which also said "the cause of the fire was undetermined."

But the agency said the lithium-ion battery packs in the hoverboards can overheat, posing a fire hazard. CPSC also said it was aware of other reports of the recalled scooters "burning, sparking or melting, several of which involved reports of flames."

CPSC advised consumers to "immediately" stop using and stop charging the recalled 42-volt version of the self-balancing scooters and contact Jetson for a full refund.

In a statement, Jetson said the voluntary recall was "out of an abundance of caution."

"The safety and quality of all our products is our top priority," the company said, "and our team is committed to ensuring our products meet all industry standards and regulatory requirements."

Copyright © 2023, ABC Audio. All rights reserved.

Seattle law grants most gig workers paid sick leave

Luis Alvarez/Getty Images

(SEATTLE) -- Seattle will provide paid sick and safe leave for most gig workers under a new law, becoming the first U.S. city to guarantee such benefits on a permanent basis for app-based employees.

Workers who perform tasks for companies like Instacart, Postmates and DoorDash will accrue a day of paid sick leave for every 30 days they do work in Seattle. While on leave, workers will receive pay based on their average daily compensation.

The law permanently enshrines a temporary measure that mandated paid sick and safe leave for some food delivery workers in Seattle during the pandemic, when many customers stuck at home came to depend on delivery services. That measure was set to expire on May 1.

"A healthy workforce leads to a healthy community, and no one should have to choose between taking a sick day to care for themselves -- or their families -- and making rent," Seattle Mayor Bruce Harrell said in a statement.

"Gig workers stepped up to serve our city during the pandemic and are an essential part of our workforce and economy, and this important legislation ensures the rights of our app-based workers remain protected," Harrell added.

The new law expands the type of workers covered from food delivery employees to those working for a slew of apps covering a range of "on-demand" tasks. Gig workers who set their own pay will not be covered.

App-based drivers for Uber and Lyft are already guaranteed paid sick days under state law, according to a press release from the mayor's office.

Workers protected by the law will be allowed to take time off to care for their own health or that of a loved one, go to a doctor's appointment or pick up a child in the event of a school closure, among other activities, the mayor's office said.

The legislation marks the latest advance for gig workers as some city, state and federal officials push for some app-based workers to either be classified as employees or receive benefits akin to those that companies must offer part-time or full-time staff.

In a statement, Instacart said it is open to collaboration with lawmakers on enhanced worker protections but that the new law could lead to higher prices for its customers.

"Instacart is committed to providing shoppers what they need to earn on their terms, and we continue to make shopper health and safety a top priority," the company said. "Instacart is willing to work with any policymaker that prioritizes the health and safety of shoppers who choose to earn income through our platform."

"However, at a time of high inflation and tightening household budgets, it is critical that policymakers also take into account the rising financial burden their misguided policy proposals could have on their constituents," the company added.

In 2022, the Biden administration proposed a rule change that would make it easier for gig workers to be classified as employees, giving them access to minimum wage protections and other benefits.

Meanwhile, over the past five years, legislators in nine states have proposed laws that would guarantee portable benefits for gig workers that would travel with them from one app-based company to the next, according to the National Conference of State Legislatures.

At the outset of 2020, California implemented a measure called Assembly Bill 5, which eased the standards used for classifying gig workers as full-time employees, affecting at least one million workers.

Months later, a state referendum approved by California voters excluded Uber and Lyft workers from the new standards, returning them to the category of independent contractors.

In Seattle, gig worker advocates celebrated the new legislation guaranteeing paid sick and safe days.

"The gig economy is booming thanks to workers," Danielle Alvarado, the executive director of the nonprofit Working Washington, said in a statement.

"We are proud that Seattle has recognized the importance of making sure gig workers can stay home when they are sick or need to take care of a loved one," Alvarado added. "When gig workers are protected, we all are."

Copyright © 2023, ABC Audio. All rights reserved.

Disgraced crypto exec Sam Bankman-Fried faces new bribery charge, pleads not guilty

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(NEW YORK) -- Embattled crypto executive Sam Bankman-Fried now faces an additional criminal charge of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act, according to a superseding indictment unsealed Tuesday in the Southern District of New York.

The new charge brings to 13 the total number of counts Bankman-Fried faces, all stemming from alleged corruption in the operations of the crypto companies he founded: FTX and Alameda Research.

Bankman-Fried pleaded not guilty on Thursday to this newest count and four others unsealed in a prior indictment in late February. Bankman-Fried had previously pleaded not guilty to the other eight charges he faces.

“We will be challenging the new charges when motions are filed," a spokesperson for Bankman-Fried told ABC News.

Bankman-Fried is due back in court June 15.

Bankman-Fried allegedly agreed to pay $40 million in cryptocurrency to foreign officials in China so they would unfreeze certain trading accounts on two of China's largest crypto exchanges that belonged to Alameda, according to the superseding indictment.

The accounts had been frozen in 2021 by Chinese authorities as part of an investigation of a certain Alameda trading counterparty.

"After the accounts were frozen, Samuel Bankman-Fried, the defendant, and others operating at his direction, considered and tried numerous methods to unfreeze the accounts," the indictment said. "After months of failed attempts to unfreeze the accounts, Samuel Bankman-Fried, the defendant, discussed with others and ultimately agreed to and directed a multi-million dollar bribe to seek to unfreeze the accounts."

The alleged bribe payment was carried out in November 2021, at which time the accounts were unfrozen, prosecutors said, and Bankman-Fried resumed trading with the estimated $1 billion that remained in those accounts.

Bankman-Fried has pleaded not guilty to eight criminal charges. He has yet to enter a plea on this newest count and four others unsealed in a previous superseding indictment in late February.

Bankman-Fried has been free on a $250 million personal recognizance bond and under court orders to live with his parents. On Thursday, the judge overseeing the case will consider additional restrictions on Bankman-Fried's bail after federal prosecutors raised concerns about his internet activities and his contact with current and former FTX employees.

According to a new court filing, Bankman-Fried's parents have agreed to not allow him to use their phones and laptops and to install monitoring software on those devices that will photograph the device's user every five minutes.

If the judge agrees, Bankman-Fried will not be allowed to contact current or former FTX and Alameda employees, use Signal or other encrypted messaging apps or use a VPN to access the internet.

He will be given a new laptop configured to allow access only to pre-approved websites, which are necessary for the preparation of the defense or for personal use, and do not pose a risk to the community.

Copyright © 2023, ABC Audio. All rights reserved.

Roku to slash 200 jobs, amounting to 6% of workforce

Justin Sullivan/Getty Images, FILE

(NEW YORK) -- Roku plans to lay off another 200 workers, or 6% of its workforce, the video-streaming company said in a government filing on Thursday, just months after a prior round of layoffs in the fall that slashed 200 jobs.

The company's revenue surged during the pandemic when customers stuck indoors came to rely on at-home entertainment.

However, the return of consumer habits more closely resembling pre-pandemic life has posed a challenge for the San Jose, California-based company.

The round of layoffs, which the company described as a "restructuring plan," aims to "lower the Company's year-over-year operating expense growth and prioritize projects that the Company believes will have a higher return on investment," the government filing said.

The layoffs will cost the company between $30 and $35 million due to severance payments and other employee benefits, the filing said.

The company's revenue stood essentially unchanged over the last three months of 2022 compared with the same period a year ago, according to an earnings report released last month.

Roku had previously warned of a difficult business environment expected at the end of last year due to a slowdown in ad spending and the adverse effects of inflation.

Shares of Roku ticked up about 1.5% in early trading on Thursday.

Copyright © 2023, ABC Audio. All rights reserved.

Elon Musk, Steve Wozniak and other tech leaders warn 'out-of-control' AI poses 'profound risks'

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(NEW YORK) -- Artificial intelligence-driven language models have garnered millions of users in recent months, instantly whipping up viral sensations like a biblical verse about how to remove a peanut butter sandwich from a VCR.

However, the AI-enhanced chat bots pose significant dangers that far outweigh the benefits, according to a group of tech leaders, including entrepreneur Elon Musk, who signed an open letter on Wednesday calling for a six-month pause in the development of AI systems and a major expansion of government oversight.

"AI systems with human-competitive intelligence can pose profound risks to society and humanity," the letter said.

"Recent months have seen AI labs locked in an out-of-control race to develop and deploy ever more powerful digital minds that no one – not even their creators – can understand, predict, or reliably control," the letter added.

Earlier this month, artificial intelligence company OpenAI released the latest version of ChatGPT, the AI-powered language model that became an internet sensation late last year.

GPT-4, the latest model, can understand images as input, meaning it can look at a photo and give the user general information about the image; and it can write code in all major programming languages, among other advances.

The open letter released on Wednesday calls on AI labs to immediately pause the training of AI systems more powerful than GPT-4.

In addition to Musk, prominent figures signed onto the letter include Apple Co-founder Steve Wozniak, former Democratic presidential candidate Andrew Yang and Marc Rotenberg, the president of the nonprofit Center for AI and Digital Policy.

In all, the letter features more than 1,000 signees, including professors, tech executives and scientists.

The letter arrives roughly a month after Microsoft released a newly AI-enhanced version of its search engine Bing for some users.

Microsoft declined to comment on the letter. Open AI did not immediately respond to a request for comment from ABC News.

Describing conversations with the chatbot that lasted as long as two hours, some journalists and researchers warned that the AI could potentially persuade a user to commit harmful deeds or steer him or her toward misinformation.

In a series of blog posts, Microsoft acknowledged unexpected results and placed limits on the tool.

"We've updated the service several times in response to user feedback, and per our blog are addressing many of the concerns being raised, to include the questions about long-running conversations," a Microsoft spokesperson previously told ABC News.

In January, Microsoft announced it was investing $10 billion in OpenAI, the artificial intelligence firm that developed Chat GPT.

The move deepened a longstanding relationship between Microsoft and OpenAI, which began with a $1 billion investment four years ago.

The open letter called on AI developers to work with policymakers to improve oversight of artificial intelligence technology, and called on the industry to shift its priorities as it works to enhance AI.

"AI research and development should be refocused on making today's powerful, state-of-the-art systems more accurate, safe, interpretable, transparent, robust, aligned, trustworthy, and loyal," the letter said.

ABC News' Victor Ordonez contributed reporting.

Copyright © 2023, ABC Audio. All rights reserved.

Starbucks' former CEO denies breaking law after Sen. Sanders accuses company of 'union busting'

Al Drago/Bloomberg via Getty Images

(WASHINGTON) -- Starbucks' former CEO Howard Schultz on Wednesday denied breaking the law in response to sharp criticism from Sen. Bernie Sanders, I-Vt., who accused the company of "the most aggressive and illegal union busting campaign in the modern history of our country."

In response to questions from Sanders during a Senate hearing, Schultz affirmed the right of workers to choose whether to unionize and defended the company's actions.

Starbucks "has not broken the law," Schultz said. "Let me set the tone for this very early on."

Schultz, who served as Starbucks CEO for over 20 years across three stints and stepped down from the position last week, said Starbucks has negotiated in "good faith" with employees as they've sought to unionize and obtain collective benefits.

More than a dozen decisions from federal officials have found that the company violated labor law in its response to a wave of union campaigns at its stores, according to the National Labor Relations Board, a federal agency.

Roughly 290 of almost 9,000 company-owned stores in the U.S. have voted to unionize. However, workers have yet to sign a union contract at a single location.

Earlier this month, an administrative judge ruled that Starbucks had committed "egregious and widespread misconduct" in its effort to prevent unionization at some of its stores.

The judge, Michael A. Rosas, mandated the company reinstate several workers and Schultz read a notice to employees, among other remedies.

More than 500 formal allegations of labor law violations have been filed against Starbucks with regional offices of the NLRB, the agency said this month.

In all, 13 decisions have ordered remedies for unfair labor practices committed by Starbucks, including the reinstatement of 22 employees, the NLRB said. Some of those decisions have been appealed, the agency added.

Schultz characterized the findings against Starbucks as "allegations," adding that the company is "confident that those allegations will be proven false."

Workers United, the labor organization organizing Starbucks workers, said in a statement that it welcomed the Senate hearing as a venue for Schultz to face accountability for his response to the union campaign.

"We're hopeful for change," a Workers United spokesperson said. "We're hopeful that this hearing moves the needle forward for baristas and workers all across the country."

"We look forward to Howard Schultz being held accountable for his actions and being forced to answer to his unprecedented union-busting campaign under oath," the spokesperson added.

Starbucks workers achieved an unprecedented wave of unionization at the company last year but the pace of union victories fell significantly over the course of last year.

Over the first half of 2022, the National Labor Relations Board received union election petitions from an average of 47 Starbucks stores per month; but over five months ending in November, that election rate dwindled to 11 stores per month, according to data from the NLRB.

Sanders asked Schultz a series of questions about his possible role in alleged retaliation against unionizing employees.

"Were you ever informed of or involved in a decision to fire a worker who was part of a union organizing drive?" Sanders asked.

Schultz replied: "I was not."

Following up, Sanders asked, "Were you ever informed of or involved in a decision to discipline a worker in any way who was part of a union organizing drive?"

Schultz replied, "I was not."

Sanders then asked, "Have you ever threatened, coerced or intimidated a worker for supporting a union?"

In response, Schultz said, "I've had conversations that could've been interpreted in a different way than I intended."

"That's up to the person who received the information that I spoke to them about," Schultz added.

Maggie Carter, a barista at a store in Knoxville, Tennessee, that marked the first Starbucks location in the South to unionize, told ABC News that a union offers workers the best opportunity to improve the workplace.

"A union is the solution because it uplifts workers entirely and gives us the opportunity to operate as a unit," Carter said.

"You can ask your boss to make changes, but they can unilaterally change those changes if it's not working for them anymore," added Carter, who testified before the Senate committee on Wednesday. "With a union contract, they have to ask you."

During questioning from Sen. Tina Smith, D-Minn., Schultz expressed frustration over a statement made by Smith that referred to him as a "billionaire."

Schultz -- whose net worth is $3.7 billion, according to Forbes -- said the term diminishes his achievement of self-made wealth.

"This moniker of billionaire, let’s just get at that, OK?" Schultz said. "My parents never owned a home. I came from nothing. I thought my entire life was based on the achievement of the American dream. Yes, I have billions of dollars. I earned it -- no one gave it to me."

As Schultz spoke, Sanders interrupted him, noting that the allotted time for Smith's questioning period had run out.

"It's your moniker constantly," Schultz said, addressing Sanders. "It's unfair."

ABC News' Allison Pecorin contributed to this report.

Copyright © 2023, ABC Audio. All rights reserved.

Starbucks' former CEO set to face Bernie Sanders over employees’ unionization push

JohnFScott/Getty Images

(WASHINGTON) -- When Starbucks' most famous former CEO, Howard Schultz, appears Wednesday before a Senate committee to face questioning from Bernie Sanders over the company's response to a unionization push -- including what a labor judge found to be union-busting practices -- he'll look to paint Starbucks as a "different kind of public company" that "balances profitability with social conscience."

According to Schultz's prepared testimony before the Senate Health, Education, Labor and Pensions Committee, reviewed by ABC News, he'll argue that Starbucks has negotiated in "good faith" with employees as they've sought to unionize and obtain collective benefits.

"Starbucks respects the right of all partners to make their own decisions about union representation, and Starbucks is committed to engaging in good faith collective bargaining for each store that has a union. I embrace these commitments," Schultz will say. "At the same time, our business requires speed and flexibility, both on the job and when operating more than 9,000 U.S. company-operated stores of every shape and size while addressing ever-changing customer preferences."

Schultz is also set to defend Starbucks' negotiation tactics and allege wrongdoing by union organizers -- a view starkly at odds with the Seattle-based company's pro-union employees.

"We have been arranging more than 350 bargaining sessions involving more than 200 sets of negotiations -- each relating to a single store -- and Starbucks representatives have been physically present at more than 85 sets of negotiations," Schultz plans to say. "However, union representatives have improperly demanded multi-store negotiations, delayed or refused to attend meetings, and insisted on unlawful preconditions such as 'virtual' bargaining and participation by outside observers, among other things."

Committee Chairman Sanders, I-Vt., has for months been working to haul Schultz before his committee to answer for Starbucks' behavior related to a union push among its hundreds of thousands of employees.

"Despite being the face of the company, Starbucks partners are underpaid, forced to run perpetually understaffed stores, and don't have consistent schedules they can rely on," one Starbucks Workers Union email stated amid a "Red Cup Rebellion" in November.

Michelle Eisen, a worker from the first unionized Starbucks store in the U.S. at Elmwood Avenue in Buffalo, New York, wrote in the email that workers are "organizing for a voice on the job and a true seat at the table."

In a previous statement announcing Schultz's testimony on Wednesday, Sanders said Starbucks must do more for its workers.

"Let's be clear. In America, workers have the constitutional right to organize unions and engage in collective bargaining to improve their wages and working conditions. Unfortunately Starbucks, under Mr. Schultz's leadership, has done everything possible to prevent that from happening," Sanders said in the statement. "Despite the fact that over 280 Starbucks coffee shops have successfully voted to form a union over the past year, Starbucks has refused to negotiate in good faith to sign a single first contract with their employees."

During Wednesday's hearing, Schultz will claim that much of his company's problematic union conduct occurred before he was at the helm.

In his opening remarks, he plans to say that prior to his taking the helm as interim CEO last April, it was clear the company had "lost its way."

Schultz served as Starbucks' leader for more than 20 years across three stints, most recently stepping down last week.

He'll also highlight changes he made at the company and social programs that Starbucks has extended to its partners and employees -- including opportunities for stock ownership, the company's college achievement plan, paid sick and parental leave and mental health programs.

"Our board and our leadership are in complete agreement that a direct relationship with our partners, where we have the flexibility to implement improvements quickly in wages and benefits and share success in the future, as we have in the past, is the right path forward for Starbucks, our partners and all company stakeholders," he'll say.

Copyright © 2023, ABC Audio. All rights reserved.

No evidence of TikTok national security threat but reason for concern, experts say

Karl Tapales/Getty Images

(NEW YORK) -- Social media app TikTok faces mounting bipartisan hostility in Washington D.C., where Biden administration officials and lawmakers are weighing a possible ban of the platform.

The app, which counts more than 150 million U.S. users each month but is owned by a China-based parent company, has faced growing scrutiny from government officials over fears that user data could fall into the possession of the Chinese government and the app could be weaponized by China to spread misinformation.

However, there is no evidence that TikTok has shared U.S. user data with the Chinese government or that the Chinese government has asked the app to do so, cybersecurity experts told ABC News.

Still, there's reason to believe that the Chinese government could compel the company to share data on U.S. users or manipulate content on the app to forward a pro-China agenda, considering the nation's authority over domestic companies and previous misleading statements made by TikTok on related issues, the experts added.

"We don't have smoking-gun evidence," Sarah Bauerle-Danzman, a professor who specializes in national security and business investment at Indiana University, told ABC News. "But we do know that if the [Chinese government] asks TikTok for any data, they would be compelled to provide it and we also probably wouldn't know if they did."

In a statement, TikTok cited Project Texas, an initiative that the company says keeps all U.S. user data on servers within the country.

"The whole point of Project Texas is to put TikTok U.S. user data and systems outside the reach or influence of any foreign government," the company said in a statement to ABC News.

"Today, all new protected U.S. user data is stored exclusively in infrastructure in the United States, and today all access to that environment is managed exclusively by TikTok U.S. Data Security, a team led by Americans, in America," the company added.

Here's what we know and don't know about the national security threat posed by TikTok.
No evidence that TikTok has shared US user data with the Chinese government

A key fear among lawmakers and other government officials is that TikTok could share sweeping data on U.S. users with the Chinese government or the Chinese government could force the platform to manipulate the content displayed to U.S.-based users.

But there is no evidence available that suggests TikTok has shared U.S. user data or altered content for U.S. users at the behest of the Chinese government, cybersecurity experts said.

"We actually lack any evidence that China is regularly or systematically collecting TikTok data," Ahmed Ghappour, a professor at Boston University who focuses on computer security and criminal law, told ABC News.

"We lack any evidence that China has attempted to compel TikTok to manipulate user recommendations or user data in any way that would rise to the level of a national security threat," he added.

TikTok CEO Shou Chew pointed to the lack of evidence during roughly five hours of testimony before a House committee on Thursday.

"I think a lot of risks that are pointed out are hypothetical and theoretical risks," Chew responded. "I have not seen any evidence."

"I'm eagerly awaiting discussions where we talk about evidence," he added.

In fact, some House members critical of TikTok acknowledged the lack of evidence.

Rep. Dan Crenshaw, R-Texas, closed the proceeding with a line of questions focused on potential data sharing between TikTok and the Chinese government.

"Maybe you haven't done it yet," Crenshaw said, addressing Chew. "But my point is that you might have to."

"If you want to know why Democrats and Republicans have come together on this," Crenshaw added. "That's why."

Despite a lack of evidence for the national security threat posed by TikTok, it remains a legitimate theoretical concern, since China has shown a previous willingness to exploit user data and wields extensive authority over domestic companies, cybersecurity experts said.

"We know that China is very aggressive when it comes to spying," James Lewis, a data security expert at the Center for Strategic and International Studies, told ABC News. "TikTok hasn't been caught. The Chinese have been caught."

For instance, in 2015, hackers working on behalf of China broke into the computer system of the Office of Personnel Management, a federal agency, compromising the data of as many as 4 million federal employees, the Washington Post reported.

Last month, the U.S. military shot down a Chinese spy balloon off the coast of South Carolina, ending days of travel that took the balloon across the continental United States.

U.S. Secretary of State Antony Blinken postponed a trip to Beijing just hours before he was set to depart. Blinken called the balloon a "clear violation" of U.S. sovereignty and international law. Days later, China accused the U.S. of flying spy balloons into its airspace without permission more than 10 times since the start of 2022 -- an allegation that the U.S. denied.

Meanwhile, China's use of digital surveillance on its own residents is well-documented, including the deployment of app-based data to spy on residents as part of its response to the COVID-19 pandemic.

Under Chinese law, the government could force TikTok-parent company ByteDance to turnover U.S. user data and manipulate content displayed on the app, cybersecurity experts said, noting that a lack of transparency makes it difficult to determine whether such a request has taken place.

"There wouldn't be a paper trail necessarily that would be available to the public to see if this were to occur," Bauerle-Danzman said.

TikTok has repeatedly denied sharing U.S. user data with the Chinese government or receiving a request along those lines.

However, the company has previously provided misleading information on related issues, some experts said.

TikTok engineers based in China gained access to intimate information on U.S. users between September 2021 and January 2022, even after a TikTok executive told the Senate in sworn testimony in October 2021 that a "world-renowned, US-based security team" determined which employees accessed such data, BuzzFeed reported in June.

"TikTok has a documented history of saying one thing and not always being accurate about that information," Bauerle-Danzman said.

In response to concerns about U.S. user data, Chew has touted Project Texas, an ongoing effort that he says keeps all data on U.S. users within the country through a partnership with Oracle. During his testimony before the House, Chew said ByteDance remains capable of accessing user data but will no longer be able to do so after TikTok completes Project Texas.

Chew also said the company would welcome information security controls approved by a U.S. government monitor and enforced by a third party.

"Trust must be earned through action, not words," Chew said.

ABC News' Britt Clennett, Karson Yiu and Morgan Winsor contributed reporting.

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Bank regulators blame SVB collapse on 'textbook' mismanagement during Senate grilling

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(WASHINGTON) -- The country's top banking regulators faced a grilling from lawmakers Tuesday about who was responsible for the the failures of Silicon Valley Bank and Signature Bank.

The Senate Banking Committee heard testimony from officials at the Federal Reserve, Federal Deposit Insurance Corporation and the Treasury Department in its first hearing about the overnight collapses of the institutions.

"Did the Fed drop the ball because it didn't see the risks that were building?" chairman Sherrod Brown, D-Ohio, asked as he kicked off the proceedings.

Sen. Tim Scott, R-S.C., argued "warning signs should have been flashing red and SVB should have stood out as it was: absolutely a problem child."

"I hope to learn how the Federal Reserve could know about such risky practices for more than a year and failed to take definitive corrective action," Scott added, pointing to testimony that supervisors flagged weaknesses as early as 2021. "By all accounts, our regulators appear to have been asleep at the wheel."

Michael Barr, the Federal Reserve's vice chair for supervision, pushed back that it was the job of bank managers to resolve issues stemming from their unique business models.

"The bank failed because its management failed to appropriately address clear interest rate risk and liquidity risk," Barr said, going on to describe the actions of executives a "textbook case of bank mismanagement."

Barr testified alongside Nellie Liang, the undersecretary for domestic finance at the Treasury Department, and Martin Gruenberg, who chairs the Federal Deposit Insurance Corporation.

Barr and Gruenberg signaled they have tools to reprimand bank executives -- including civil money penalties, the payment of restitution or ban from the banking industry -- pending the findings of investigations.

"We retain this authority even after a bank fails, and we stand ready to use this authority to the fullest extent based on the facts and circumstances," Barr said.

President Joe Biden has called on Congress to make it easier to punish failed bank executives, including clawing back their compensation. Gruenberg stated Tuesday the FDIC didn't have explicit authority to claw back pay but could go after executives in these other ways.

Biden also called for stricter banking rules to prevent more collapses.

Sen. Elizabeth Warren, D-Mass., on Tuesday hammered regulators on their commitment to tightening banking rules in the wake of these failures.

One after another, all three officials said they agreed banking rules should be strengthened.

"Each of you at this table has authority that you could exercise right now to strengthen rules for big banks and to ensure that our banking system and our economy are safer," Warren said. "I urge you to use that authority, and I urge my colleagues here in Congress to do our part to protect American families and small businesses from yet another banking crisis."

Barr and other officials faced questions about whether recent changes to regulation and supervision, including the Trump-era rollbacks of the Dodd Frank Act, contributed to the banks' implosions.

"If it's the regulator's fault, it better be fixed. If it's the regulation's fault, it better be fixed," Sen. Jon Tester, D-Mont., said. "If it's something else, I hope there's a report to this committee saying, 'You know what guys, this can happen again unless this happens.'"

But Republicans, who are generally opposed to more regulation, questioned if bank regulators already had the appropriate tools but decided not to use them.

Idaho Sen. Mike Crapo, a chief architect of the 2018 legislation, said it still allowed the Fed to use its discretion to impose stricter standards on individual institutions.

"You are not using the tools in your toolbox," said Alabama Sen. Katie Britt. "That is what people hate about Washington."

Barr agreed the Federal Reserve is granted "substantial discretion" under that law, and that would be "one of the areas we'll be looking at in our review."

The Federal Reserve is looking into the bank failures and their practices, with reports expected by May 1. Barr vowed "transparency" and said the Federal Reserve welcomes independent investigations.

Regulators also defended the decisions they made in the days after the collapse, including the decision to protect all deposits, citing the risk of contagion for smaller and regional banks.

"The situation demanded a swift response. In the days that followed, the federal government took decisive action to strengthen public confidence in the U.S. banking system and to protect the U.S. economy," Liang said.

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Taylor Swift fans in court over Ticketmaster fiasco

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(LOS ANGELES) -- Taylor Swift fans got their day in court on Monday, months after the botched release of tour tickets prompted widespread outcry.

A federal court in Los Angeles held a predominantly procedural hearing in a case brought by as many as 340 fans who allege that Live Nation -- and subsidiary company Ticketmaster -- violated antitrust and consumer protection laws.

Lawyers for the plaintiffs, John Genga and Jennifer Kinder, were joined by a handful of plaintiffs who flew in from various parts of the U.S., the attorneys said.

The lawyers described the plaintiffs as fans who feel the ticket-purchasing process is "broken" and "corrupt." The fans hope this is a turning point in breaking up a monopoly, the lawyers said.

The fall release of tickets for Swift's "New Era" tour, her first in five years, prompted government scrutiny of antitrust laws, including a Senate hearing in January at which Live Nation president and Chief Financial Officer Joe Berchtold apologized for the fiasco.

The lawsuit, filed in December, claims that the 2010 merger of Live Nation and Ticketmaster illegally stamped out competition in live events ticketing, allowing the company to charge exorbitant prices for tickets.

In a court filing last month, Live Nation tried to end the court proceedings and force the dispute into private arbitration, claiming that ticket buyers had agreed on multiple occasions over the course of online shopping to resolve any claims through arbitration.

Live Nation and Ticketmaster did not immediately respond to ABC News' request for comment.

"We are not going to just settle," Julie Barfuss, a lead plaintiff, told ABC's "Good Morning America." "We want to see some change."

Fans of Swift were expected to hold a rally outside the courthouse on Monday.

Days after the tickets were released, in November, Swift spoke out about the difficulty faced by ticket purchasers.

"There are a multitude of reasons why people had such a hard time trying to get tickets and I'm trying to figure out how this situation can be improved going forward," she said.

The next court date will likely be May 25.

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Much of failed Silicon Valley Bank's assets to be sold to First Citizens, FDIC says

Patrick T. Fallon/AFP via Getty Images, FILE

(NEW YORK) -- First Citizens Bank will buy about $72 billion in assets from the failed Silicon Valley Bank, the Federal Deposit Insurance Corporation said.

Silicon Valley Bank, a regional lender with about $210 billion in assets, collapsed earlier this month. The bank had been the 16th largest bank in the country.

"Today's transaction included the purchase of about $72 billion of Silicon Valley Bridge Bank, National Association's assets at a discount of $16.5 billion," FDIC officials said in a press release.

Seventeen former Silicon Valley Bank branches will open their doors on Monday as First Citizens Bank branches, the FDIC said.

About $90 billion of Silicon Valley Bank's assets will remain in receivership with the FDIC, the regulator said.

ABC News' Max Zahn contributed to this story.

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How Rolls-Royce is winning over Tesla owners and millennials

Spectre is a "Rolls-Royce first, electric car second," the company says. -- Rolls-Royce

(NEW YORK) -- It's a trend that's surprised even Rolls-Royce executives: Tesla owners frantically placing preorders for Spectre, the first all-electric Rolls-Royce that costs more than $400,000.

The 118-year-old British automaker begins production of Spectre, a chic, uber-luxe coupe that seats four, this fall. Pre-orders are already in the thousands -- with some customers forced to wait until 2025 for a slot on the production list.

Rolls-Royce has also seen astronomical demand for its Cullinan SUV, with customers, many of whom are in their 30s, waiting up to 14 months to get one.

Hip, edgier and performance-driven models, including the introduction of Black Badge, have attracted new clients and accelerated sales. Rolls-Royce delivered a record 6,021 vehicles last year, up 8% from 2021. Demand for bespoke commissions is surging and owners are paying more than $500,000 on average for their Rolls-Royce.

Martin Fritsches, president and CEO of Rolls-Royce Motor Cars Americas, credits younger buyers for pushing sales to historic highs, calling them a "driving force" behind the brand's blockbuster success. The average customer is 42 years old, down from 50 eight years ago.

"We continue to strengthen our order bank and models like Spectre are also bringing us new business and new clientele," he told ABC News. "[Rolls-Royce] is a brand that continues to evolve."

When the company unveiled a prototype of Spectre to customers last summer in Goodwood, England, Fritsches said executives were dumbfounded by the response.

"It was eye-opening for us, mind-blowing," he said. "Customers are waiting such a long time for the product -- there is no precedent in Rolls-Royce history. It's becoming a challenge to manage expectations. I have customers constantly texting me, 'Martin, where is my Spectre? When am I getting it?'"

Tesla owners in particular are now "finally adding a Rolls-Royce to their garage," he added.

Rolls-Royce, long celebrated for its hand-built automobiles, lavish interiors and mighty V12 engines, announced in September of 2021 that it would end production of its internal combustion conveyances and become an electric vehicle company by the end of 2030.

Spectre, which the company says is a "Rolls-Royce first, electric car second," can travel an estimated 260 miles on a full charge. It sprints from zero to 60 mph in 4.4 seconds and delivers 664 ft-lb of torque and 577 horsepower.

Two-time World Series champion Brandon Belt bought his first Rolls two years ago for weekend trips with the family. His growing auto collection includes the latest cars from Ferrari, McLaren, Mercedes and Porsche. Belt's Cullinan SUV, however, stands apart.

"Cullinan is the pinnacle of coolness, luxury, comfort and style," the 34-year-old first baseman for the Toronto Blue Jays told ABC News. "No other vehicle can match all these qualities."

Belt has a Black Badge Cullinan on order at his local Houston dealership, along with a Spectre.

"I am really excited about it. That will be a special one," he said.

More than half of Rolls-Royces produced between 2015 and 2022 are sold to Generation X customers, according to Jonathan Klinger, vice president of car culture at Hagerty.

"Younger buyers are partly why Rolls-Royce is doing so well. They're buying Rolls-Royces in greater quantities," he told ABC News. "A higher percentage of younger people is investing in a 'fun' vehicle -- they're not waiting until they're older."

The Cullinan helped shed the company's "unapologetically conservative luxury" label, Klinger noted, adding that Spectre will draw in deep-pocketed techies and early adopters of electric vehicles.

"The younger population is fascinated by EVs," he said.

Joe Wierda, general manager of Rolls-Royce Motor Cars Orlando, said he has a long list of clients who have put down $10,000 deposits on a Spectre. He's received more preorders for Spectre than any other Rolls-Royce vehicle in the last decade.

"This is new territory for Rolls-Royce," he told ABC News. "The design alone is so attractive that people want it and the torque and silence fit Rolls-Royce perfectly."

He's sold many Rolls-Royces to clients in their early 30s, individuals who "want to get the best car they can get," he said.

"A Rolls-Royce shows 'I have made it,'" he explained.

Sean Sleiman, 37, is one of Wierda's regular clients. He and his business partner own four Rolls-Royces, with two Spectres scheduled to arrive in January.

"It's one of the coolest cars I've ever seen," Sleiman told ABC News. "It bumps Rolls-Royce up to the next level. We thought they did a great job on it."

Sleiman, who already owns a Tesla Model X Plaid, said he will have to install a home charger for his Spectre. He splits his time between Orlando and Miami, a distance of 235 miles. Sleiman said charging his Spectre on the go, however, may be challenging.

"I am not so sure about the charging experience on the road. We will have to figure this out," he said.

Paul Dumont, general manager of Manhattan Motorcars, said Rolls-Royce's transformation in the last few years has been remarkable. There is so much buzz about Spectre that Dumont's clients may have to wait more than a year for one.

"This is the first electric Rolls-Royce. It's a big deal," he told ABC News.

Rolls-Royce has been adding jobs at its Goodwood factory to keep up with production, including a future electric sport utility vehicle. Cullinan is the company's bestselling model globally and the U.S. is the largest market for Rolls-Royce.

The Ghost, a genteel sedan with all-wheel drive, four-wheel steering and a turbocharged 6.7-liter V12 engine, has become the top Rolls-Royce in the Asia-Pacific region, though more Americans, especially families in the Northeast, are choosing one over a Cullinan. The Ghost accounts for 35% of the company's sales.

Dumont said he sells a lot of Ghosts to his New York City and northern New Jersey clients who prefer the coach rear doors, sharp handling, opulent cabin and pillowy ride.

Younger buyers may choose Rolls-Royce for the utility, technology and provocative styling. The company, however, will always stay true to its original mission.

"Rolls-Royce is more about refinement. That's what sets it apart -- the craftsmanship is unbelievable," Dumont said. "To some degree the brand is peerless."

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High interest rates hammer consumers seeking mortgage or car loans

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(NEW YORK) -- The banking crisis that erupted earlier this month elicited some predictions of a halt in interest rate hikes, since previous borrowing cost increases garnered blame for the financial distress.

Instead, the Federal Reserve on Wednesday imposed another hike, extending a yearlong blitz of rate increases that risks further banking woes and squeezes a different group: consumers in need of a loan.

The supercharged rate hikes have ballooned loan costs for mortgages, car loans and credit cards, weighing on the budgets of U.S. households or forcing them to delay buying big-ticket items.

However, some loan costs have ticked down slightly since the onset of the banking crisis in response to renewed recession fears, suggesting that relief for borrowers could arrive in the coming months but alongside a possible economic downturn, experts told ABC News.

"For ordinary families who need a new car or need to move, when the Fed hits the brakes hard and loan rates go up, that really constrains them," Andrew Levin, an economics professor at Dartmouth College and a former Federal Reserve Board special adviser, told ABC News.

The Fed has put forward a string of borrowing cost increases as it tries to slash inflation by slowing the economy and choking off demand. That means borrowers face higher costs for everything from car loans to credit card debt to mortgages.

The average 30-year fixed-rate mortgage rate stands at 6.6%, a sharp increase from a year ago, when it registered at 4.6%, a Bankrate analysis found.

Each single percentage point increase in a mortgage rate can add thousands or tens of thousands in additional cost each year, depending on the price of a house, according to Rocket Mortgage.

Consumers tempted to offload heightened costs onto a credit card have encountered skyrocketing rate increases for that debt, too.

The average credit card interest rate offered in the U.S. over the last three months of 2022 stood at 21.6%, according to WalletHub, a jump from 18.2% a year prior.

"Higher interest rates mean you really can't spend as much on big-ticket items," Derek Horstmeyer, a finance professor at George Mason University's School of Business, told ABC News. "There's a direct connection."

To be sure, the Fed has raised interest rates as part of an assault on sky-high inflation, a separate source of financial angst for U.S. households.

Inflation has fallen significantly from a summer peak, though it remains more than triple the Fed's target of 2%.

"When you raise rates a lot it can feel like slamming the brakes and be pretty uncomfortable for passengers," Levin said.

"On the other hand, families have been hit really hard in recent years by high inflation," he added. "Passengers don't want to go down a mountain at high speed either."

While loan costs remain well above where they stood a year ago, the recent banking crisis has delivered a burst of unexpected relief, experts said.

Mortgage rates inched downward for the second week in a row, according to data released by Freddie Mac on Thursday.

The fall in mortgage rates owes to a quirk in the relationship between interest rates and home loan costs.

Mortgage rates track closely with rates for 10-year treasury bonds, which themselves correlate with expectations for the Fed's benchmark interest rate over the next few years, Levin said.

If investors think interest rates will soon reverse downward, a drop in mortgage rates often precedes the interest rate pivot.

The financial distress has heightened recession fears, prompting investors to expect a significant lowering of interest rates over the next 12 to 18 months, which in turn has pushed down mortgage rates, Levin said.

"If that expectation continues, then the 10-year treasury rate will drop quite a bit," Levin said. "Then it pulls down mortgage rates and that improves the affordability of families looking to move or first-time homebuyers looking to buy a house."

Car loans will likely experience a trajectory similar to that of mortgage rates, though credit card costs should lag behind, Levin said.

"There might be a glimmer of hope," he added.

Tempering such optimism, however, is the economic force that would push down interest rates: a recession.

"This crisis where we broke a few banks – that's probably going to push us into a recession," Horstmeyer said, noting that the adjoining job losses and decline in demand should bring down inflation and allow the Fed to ease interest rates.

"That kind of did the Fed's job for it," he added.

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