Crypto News: Wall Street’s bad month

Wall Street's financial firms ended February bruised and battered. The month witnessed the continuing march of artificial intelligence as advances in the technology continue to augur reckonings for legacy industries. Throw in more signs of private credit's expensive shortcomings, and you had a winter recipe for red ink.

The combination delivered another selloff in shares of banks and asset managers Friday. The KBW Bank Index slumped 4.9%, dragging the group to levels last seen in early December and its worst session since Donald Trump's April tariff fusillade. All 23 members slid at least 1.9%, with Western Alliance, Goldman Sachs and Zions Bancorp among the worst performers.

Friday's rout was a continuation of a trend that's been unfolding over the past few weeks, as AI worries have consumed nearly every part of the financial sector. Wealth managers, insurance brokers, big banks, boutique advisers, financial data providers and even exchanges have all taken a hit. —David E. Rovella

What You Need to Know Today

House Minority Leader Hakeem Jeffries said Democrats will go to court to stop Trump if he tries to assert federal power over America's elections, a threat the 79-year-old Republican has floated ahead of the 2026 midterms.

The president's approval rating is at record lows and the GOP is seen at a disadvantage in retaining control of one or both chambers of Congress. Trump has directed his party to redraw Congressional districts to cut Democratic representation and push through restrictions on voter access, based on false claims of widespread voter fraud.

"We'll use every tool available, including suing the heck out of him, if he tries to go down this road," Jeffries said Friday in an interview with David Gura and Christina Ruffini on Bloomberg This Weekend, asserting that Trump is "trying to rig the midterm elections because he knows his presidency has been a failure."

Trump 2.0

Trump Faces 2,000 Tariff Lawsuits Following His Supreme Court Defeat

The president has said he might oppose paying back American companies their $170 billion, or at least not make it easy for them.

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Some creditors of Market Financial Solutions, the failed UK mortgage firm backed by Wall Street lenders, warned there may be a $1.3 billion shortfall in collateral backing their loans. Zircon Bridging and Amber Bridging, the companies that forced MFS into a UK form of insolvency this week, accused the London-based firm of using the same assets as collateral for multiple loans.

The collapse of MFS, which attracted backing from firms including Barclays, Apollo Global Management's Atlas SP Partners unit, Jefferies Financial Group and TPG, is the latest crisis to hit both banks and direct lenders, and puts a spotlight on asset-based financing. Accusations of double pledging also emerged in the collapses last year of US auto parts supplier First Brands Group and subprime auto lender Tricolor Holdings.

Four years after Vladimir Putin's full-scale invasion of Ukraine, and 12 years since he began Russia's war on its neighbor, more evidence is appearing that his country is paying a price beyond its more than 1.2 million dead and injured soldiers, mercenaries, convicts and conscripts.

Even as the Kremlin leader may be turning his attention to Eastern Europe and a NATO alliance increasingly undercut by its biggest member, continuing sanctions and slumping revenues are taking their toll on Russian businesses in regions that previously benefited from military spending.

War

Ukraine Scrambles to Asses Pipeline Attacked by Russia Tied to EU Aid

The disruption of oil flows through Druzhba to Hungary and Slovakia has led the two Kremlin-friendly EU members to accuse Ukraine of withholding supplies.

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OpenAI has raised $110 billion in a deal that values the startup at $730 billion, representing the ChatGPT maker's largest funding round to date and bolstering its costly push to secure more computing power and talent for AI development.

Amazon is investing $50 billion in cash in the financing round, by far the largest amount the e-commerce giant has put into any company. Amazon will initially commit $15 billion, followed by another $35 billion when certain conditions are met.

Amazon's additional investment is said to be contingent on OpenAI moving forward with an initial public offering or declaring it's achieved a more powerful form of AI known as artificial general intelligence. In a public filing Friday, Amazon said it must commit the remainder if and when OpenAI goes public.

Anthropic told the Trump administration its Claude artificial intelligence software should not be used for mass surveillance against Americans, which is generally illegal, or in fully autonomous weapons operations. Defense Secretary Pete Hegseth pushed back, threatening retaliation if the company did not bend to his will. It did not.

So on Friday, the spat escalated. Trump sent out an angry social media post, replete with all-caps words, an insult and a dubious reference to constitutional law, announcing that the federal government would cease using Anthropic's products.

Department of Defense

The Cold War Era Law at the Center of Hegseth's Anthropic Threat

The former cable TV host-turned-Pentagon chief has threatened unprecedented steps in the administration's standoff, a move which risks touching off a legal fight and damaging future US AI capabilities.

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Paramount Skydance's $111 billion bid for Warner Bros. Discovery Inc. will strain its credit rating, an S&P Global Ratings analyst said, even if the combined company could ultimately cut its debt levels over time. S&P Global Ratings has a BB+ rating for Paramount Skydance, the highest junk level. The entertainment company this week clinched a deal for Warner Bros. after Netflix dropped out.

"The amount of debt this combined company will have is enormous, something like $80 billion, and given what leverage will look like for this combined company, it's pretty obvious that there's a lot of pressure on this rating," said Naveen Sarma, an analyst at S&P, in an interview with Bloomberg on Friday. "The leverage would be higher than what is acceptable for this rating."