Can Trump save TikTok?

Trump’s TikTok cover

TikTok users have continued to flood the social media platform — and lawmakers’ inboxes — with pleas to halt a proposed law that would force its Chinese owners to divest or risk a ban in the US.

That effort to keep TikTok online has now attracted some unlikely backers, including Donald Trump.

A summary: Last week, a powerful House of Representatives committee voted 50-0 to remove TikTok from US app stores by September 30 unless its Beijing-based parent company ByteDance sells its stake. A large contingent of Republicans and moderate Democrats view the app as a national security risk.

President Biden said Friday he would sign the bill if it reaches his desk — even as his campaign has embraced the platform.

But Trump may have upset the political calculus in Washington. As of last week, the former president has opposed a TikTok ban, arguing that such a move would undermine Meta’s Facebook – the “real enemy of the people!” would strengthen. (Recall that as president, Trump issued an executive order directing ByteDance to divest its US assets.)

Trump’s 180 may already have weakened support for the bill. Senator Lindsey Graham, Republican of South Carolina and a prominent China hawk, said Sunday that he “deeply conflicted‘ about the bill and was unsure how he would vote on it.

There are a few reasons why Trump changed his mind. Pro-Trump MAGA content “does really well on TikTok,” Alex Bruesewitz, a Republican strategist, told Axios. He added, without citing evidence, that “Meta suppresses MAGA content on both Facebook and Instagram.”

And appealing to Biden on an issue dear to younger voters could be politically advantageous for Trump.

TikTok is also gaining powerful connections. The Club for Growth, the anti-tax lobbying group, has hired the former Trump adviser Kellyanne Conway to advocate for the social media platform, according to Politico. (Trump recently stated that he and the Club for Growth “back in love‘after it endorsed other candidates in the Republican primaries.)

Meanwhile, billionaire investor Jeff Yass, who has a 15 percent stake in ByteDance, is also a major donor to the Club for Growth. Yass, who backed several Trump rivals for the Republican nomination, is also trying to make a rapprochement with the former president after inviting him to speak at the group’s recent retreat.

HERE’S WHAT’S HAPPENING

Reddit is aiming for a valuation of up to $6.4 billion for its IPO The social media company announced this this morning that it would look to raise up to $748 million as it began its roadshow ahead of a listing on the New York Stock Exchange. The company also announced that it would create a subreddit dedicated to its IPO and host an “ask me anything” session for potential investors.

“Oppenheimer” is the big Oscar winner. The biopic about the creator of the atomic bomb won seven awards, including best film, best director for Christopher Nolan and best actor for Cillian Murphy. The studios that came out on top this year include Comcast’s NBCUniversal (“Oppenheimer” and “The Holdovers”), Disney (“Poor Things”) and A24 (“The Zone of Interest”).

Wall Street will be keeping an eye on inflation this week. The Commerce Department will release February’s Consumer Price Index report on Tuesday. This is data that could be critical to the Fed’s thinking about lowering interest rates. On the earnings front, carmakers Volkswagen, Porsche and Mercedes-Benz report this week, while Western brands worry about the growing threat from Chinese electric vehicles.

Should capital requirements be reconsidered?

Andreas here. A year after the collapse of Silicon Valley Bank reignited fears about the strength of the banking system, the debate over what to do next continues.

But there is a more important, if perhaps prosaic, point that I want to discuss this morning: we are thinking about “capital requirements” – regulatory standards designed to protect banks from losses and runs on deposits, and whose levels have been the subject of debate since the 2008 financial crisis – are all wrong.

And the truth is that some journalists – including myself – have not helped. (We may have made it even more confusing.)

We often refer to ‘capital requirements’ as a ‘rainy day fund’, or cash-like instruments that must be ‘held’ for banks to withstand a shock to the system. But that’s not quite right.

My friend Jesse Eisinger, the Pulitzer Prize-winning journalist, and Anat Admati, a professor at Stanford, recently emailed me and other colleagues separately, pointing out the misunderstanding about how the rules around “capital requirements are described.

‘Capital is not cash or other assets’ Eisinger wrote. “Bankers always purposely confuse liquidity and capital so that it appears as if they have to ‘hold’ it and cannot lend it.”

Admati made the point this way: “In reality, the rules are about how banks FUND their investments, which has to do with the liabilities and equity, and not at all with the ASSETS they can ‘keep on the other side of the balance sheet’ ‘. magazine,” she wrote. “The insidious confusion plays right into the hands of the banking lobbies, as they find it easy to claim that ‘capital’ is somehow ‘on the sidelines’ and not being used for investment versus financing.”

Admati emphasizes that the capital is “actually something that banks can use to invest.”

To some extent the argument is somewhat semantic, because the amount of capital a bank has determines how much risk it takes in its lending decisions.

And capital requirements can influence banks’ lending and trading. When regulators require more capital to be used to finance riskier loans, banks may make fewer such loans. Bankers can therefore rightly argue that capital requirements limit some lending.

But regulators would respond that they want to make sure lenders are safe, avoiding bailouts and the more devastating consequences of bank failures.

Does this make the debate clearer? Let us know at dealbook@nytimes.com.

Where Musk’s philanthropy falls short

In a close examination of Elon Musk’s philanthropy, which has helped the world’s second-richest man cut his tax bill by giving away billions, The Times has uncovered a haphazard history of giving.

The big question the investigation raises is whether the Musk Foundation — which has $7 billion in assets as of 2022 — has done enough to comply with federal tax laws.

The organization seems to be lacking, when it comes to the law that requires foundations to give away at least 5 percent of their assets every year, The Times reports. At the end of 2022, the foundation had spent $234 million on this, after having not met the threshold for two years in a row.

Debating the state of Delaware

At the Tulane Corporate Law Institute conference last week in New Orleans – probably the most important M.&A. conference in the country – one topic dominated the conversation: Delaware’s future as America’s corporate capital.

A landmark court ruling on Elon Musk’s pay package is the latest to raise concerns. Kathaleen McCormick of the Delaware Court of Chancery in January canceled Musk’s salary package worth about $50 billion at Tesla. She said the automaker’s board of directors had not exercised any independent oversight to approve it, meaning Tesla’s CEO essentially decided his own compensation as a de facto controlling shareholder. Now Musk is urging companies to move their operations out of Delaware.

Many attendees said the ruling endangers the state’s reputation. “The decisions coming out of the courts are calling into question the predictability of Delaware law,” said Catherine Dearlove, a partner at the Delaware-based firm Richards, Layton & Finger.

Scott Barshay, a New York-based partner at Paul, Weiss, Rifkind, Wharton & Garrison and one of the country’s top business advisors, said companies looking to go public within a year can choose to focus on in states like Nevada that pitch themselves as friendlier to corporate management. “I think these things will give you some doubt about Delaware integration,” he said.

Leo Strine Jr., the pronounced former chief justice of the Delaware Supreme Court, who now works at the corporate law firm Wachtell, Lipton, Rosen & Katz, acknowledged the risks. “I still think Delaware is by far the best choice, but the stakes are high,” he said.

The state still has defenders. “We’ve seen this before,” said Joel Friedlander, a partner at Delaware-based Friedlander & Gorris. He reminded attendees of previous calls to leave the state, including by the anti-Delaware activist group now known as Citizens for Judicial Fairness, which he said had harassed judges. The anti-Delaware movement, Friedlander added, “could not have been led by a worse group of people.”

Those present advised patience. Some, like Strine, suggested that everything would be fine, while Collins Seitz Jr., the chief justice of the Delaware Supreme Court, cited an unexpected source in describing the state of affairs: “You need to calm down,” he said, a Taylor Swift song.

READING THE SPEED

Offers

Policy

President Biden will propose a budget on Monday that will raise taxes on corporations and the wealthy and include a series of measures to combat high consumer costs. (NYT)
“US election leaders are concerned AI is coming for them” (Politics)

The best of the rest

“A mistake in a Tesla and a panicked last call: The death of Angela Chao” (WSJ)
Americans just moved their clocks forward for daylight saving time, but here’s a reminder that almost every state has tried abolish it. (Business Insider)

We want your feedback! Send your ideas and suggestions by email to dealbook@nytimes.com.