The Morning Risk Report: White House Changes Federal Contracting Rules to Eliminate DEI Considerations By David Smagalla

Good morning. The Trump administration is directing federal agencies to no longer consider a company's diversity, equity and inclusion practices when deciding whether to procure its goods or services, according to an announcement from the General Services Administration.

Big shift: The new policy reverses a Biden administration initiative that asked the government to weigh a company's internal DEI practices as one of many factors when considering whether to purchase that company's products or service.

Policy changes: The new GSA directives call for renegotiations if six months or more are remaining on a contract, in order to remove clauses relating to DEI. Companies won't be penalized for continuing internal DEI programs under the new policy, but those programs won't be considered as a factor in contract awards, according to a spokesman for the GSA.

More to come? The move is among the first in what the GSA says will be an overhaul of federal procurement practices. The set of acquisition regulations "has grown to more than 2,000 pages. It's burdensome, outdated, and doesn't allow agencies to buy at the speed of need," said Josh Gruenbaum, commissioner of the Federal Acquisition Service.

Also see: Support Among Asset Managers for Investor Action on Climate, DEI Falls Compliance

Some crypto traders caught in FTX collapse are about to get paid back.

Starting Tuesday, some FTX customers are set to get their money back , more than two years after Sam Bankman-Fried's cryptocurrency exchange filed for bankruptcy.

Initial payouts starting this week will go to smaller customers with claims of less than $50,000. Ultimately, the bankruptcy estate plans to repay billions of dollars.

The catch. Getting full repayment of claims is unusual in bankruptcy. Many FTX customers were still unhappy, though, because payouts are calculated in dollars based on what their holdings were worth in November 2022-a low point for the crypto markets. Bitcoin and other digital currencies have since soared in price.

As a candidate, President Trump frequently told voters the nation was beset by emergencies. Now, his claim has become more than campaign rhetoric . Trump's emergency declarations are part of the legal basis he cites for unlocking enhanced executive powers that he is deploying to jump-start his second term, but this tactic has drawn criticism from people aligned with both parties.

New York City Mayor Eric Adams was fighting for his political survival Tuesday, with New York Gov. Kathy Hochul meeting top Democratic leaders to determine whether he is fit to serve, and a federal judge ordering prosecutors to explain during a court hearing Wednesday why they were seeking to dismiss the Adams bribery case.

A judge allowed part of Audax Group's lawsuit against H.I.G. Capital to proceed, extending the dispute between the private-equity firms over the management of Mobileum, a telecommunications software business that filed for bankruptcy last year.

White House trade adviser Peter Navarro has had a major influence on punitive levies as Trump's trade team awaits Senate confirmation. The influence of Navarro, one of a few of Trump's first-term inner circle returning for a second run, is causing some consternation on Capitol Hill. Risk

U.S. and Russia forge new path on Ukraine after first high-level talks in years.

The U.S. and Russia agreed to appoint teams to try to end the war in Ukraine, marking an end to three years of U.S. policy that focused on isolating Moscow and supporting Kyiv for as long as it was willing to keep fighting.

The announcement Tuesday of a formal process to try to halt the war followed top-level talks between Washington and Moscow aimed at resetting Washington's tense relationship with Moscow. But the two sides stopped short of announcing a summit meeting between President Trump and Russian President Vladimir Putin that Trump had signaled he had hoped to hold soon.

A Guide to U.S.-Russia Talks on Ending the War in Ukraine European Capitals Clash Over Ukraine as Trump Makes Overtures to Putin President Trump on Tuesday said he was considering tariffs of 25% or more on automobiles, semiconductors and pharmaceutical products.

Federal Reserve governor Christopher Waller said the central bank should cut interest rates further if inflation makes more progress back toward target, even if Trump administration policies are adding economic uncertainty.

The Reserve Bank of New Zealand slashed interest rates by a further 50 basis points, continuing its campaign to restart a stalled economy, while sounding a warning about the increased potential for international trade tensions, slower world growth and geopolitical shocks.

German investor confidence rose this month on hopes that a change of government could spur a reversal of economic fortunes, despite continued uncertainty surrounding potential U.S. trade tariffs.

U.K. annual inflation in January reached its highest level since March last year , complicating the picture for the Bank of England after it said it would cut interest rates gradually amid a weak outlook for economic growth.

Southwest Airlines is slated to shed 15% of its corporate workforce, eliminating about 1,750 jobs in an effort to cut costs and streamline the carrier's operations. The cuts are a first for Southwest, which hadn't previously conducted a mass layoff in its 53-year history. Data Security

Sen. Ron Wyden remains hopeful for bipartisan action on tech, cyber issues.

A divided Congress needs a bipartisan approach to solve the cybersecurity and technology challenges of the future, amid crippling attacks on critical infrastructure and severe threats from nation-states, according to one of its longest-serving members .

Legislation from Sen. Ron Wyden (D., Ore.) has frequently dealt with privacy and surveillance issues, along with cybersecurity. He is a member of the Select Committee on Intelligence and the ranking member for the Senate Finance Committee.

Wyden spoke with WSJ Pro Cybersecurity on the state of bipartisanship over cyber issues in Congress. He also discussed the rapid changes to the federal workforce under President Trump's administration and Elon Musk's Department of Government Efficiency. Wyden has emerged as one of the strongest critics of DOGE.

What Else Matters Illegal border crossings plummeted even further in the first weeks of the Trump administration, accelerating a trend that started under former President Joe Biden.

Among the veteran diplomats and national security advisers gathering for top-level talks between the U.S. and Russia, Harvard-educated Kirill Dmitriev cut a distinct figure this week.

The Egg Clearinghouse connects large-volume buyers with sellers, providing a crucial service at a time avian flu is limiting supplies.

Pope Francis is suffering from the first signs of pneumonia , the Vatican said on Tuesday, signaling a potentially lengthy stay in the hospital as concerns about the health of the 88-year-old pontiff grow.

Luxury's luster is fading in China . A sluggish economy, the austere political mood and the feeling among some consumers that pricey brands are passé have combined to end the boom that has propelled the industry in recent years.

Brazil's Attorney General's Office charged former President Jair Bolsonaro on Tuesday with plotting to overturn his 2022 election loss as the country's authorities zero in on one of President Trump's closest allies in Latin America. About Us

Follow us on X at @WSJRisk . Follow Risk & Compliance editor David Smagalla @DSmagalla_DJ and reporters Mengqi Sun @_MengqiSun and Richard Vanderford @VanderfordRich .

You can reach us by replying to any newsletter, or email David at [david.smagalla@wsj.com].

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

February 19, 2025 07:06 ET (12:06 GMT)

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