Can bankers be fired for demanding sleep?

0:02Good morning from the Financial Times. Today is Thursday, February 19th. And this is your FT News briefing. JP Morgan wants to be the Board of Peace's bank. And the gilt market is wary of the UK's defense funding plans. Plus, an investment banker is suing her former employer over the right to get some shut-eye. I think this is where this really interesting generational question comes in. Where sort of perhaps an older generation might say, this is how it's always been done, kind of get used to it. I'm Mark Filippino, and here's the news you need to start your day.

0:41J.P. Morgan Chase is in talks to provide banking services to the U.S.-led Board of Peace. The body is set to have its first formal meeting today, and it was originally conceived to help create a new governance framework for Gaza in the wake of the war between Israel and Hamas. But U.S. President Donald Trump has increasingly presented it as an alternative to the U.N. Two people familiar with the situation said J.P. Morgan was discussing providing services such as facilitating payments to and from the board. Officials from the Trump administration and from the bank declined to comment on any discussions.

1:16It's an interesting twist. As the president recently sued J.P. Morgan chief executive Jamie Dimon, Trump claims the lender closed his bank accounts for political reasons.

1:32The UK government needs to raise more money to fill a hole in its armed forces budget. But there's a problem. Rachel Reeves, the chancellor, has insisted that she will stick to fiscal rules that prevent borrowing from breaching strict limits. So officials have been looking for a workaround. Investors, though, are not thrilled by the idea. Ian Smith, our senior markets correspondent, is here to explain. Hi, Ian. Hi, Mark. So Ian, can you outline the problem the government is facing on defense spending? So the UK, like other countries, wants to increase its spending on defence in view of the various rising geopolitical threats around the world.

2:07So Keir Starmer, the Prime Minister, was just at the Munich Security Conference talking about going faster on defence spending. The UK plans to spend 3 % of GDP on defence at some time during the next parliament. and they are currently thinking about whether they accelerate that timeline, but that would lead to a lot more funding need for that extra spending. And how would they fund this? This is a big question and it's one faced by governments around the world. There are various options. The simplest is just to borrow more to fund the spending. And the context here for the UK is that we already have the highest borrowing costs in the G7.

2:44The 10-year gilt yield is just shy of 4.4%. that's partly because of the near record amount of debt issuance that we currently have. So adding more borrowing to fund this would be tricky. One potential workaround that they're considering is whether to carve out defense spending from those fiscal rules to say that that's an exception. And so they can stay within the fiscal rules that they've created, such as to have public debt falling as a share of GDP by the end of the parliament, while also making this additional spending on defense. All right, Ian, so how would this go down with markets? So the idea of a carve-out is really something that is getting short shrift among the gilt investors that I speak to.

3:24One described it as a ruse for the UK government to borrow more. They are likely to see through any of the labelling that is put on this. They'll just very simply say, how does this affect the forecast that we have for government debt supply over the coming years? They also think this defence spending could be quite hard to reverse, So they're thinking it could be a lasting uplift in spending that inevitably means more debt issuance, and then the market would demand a higher borrowing cost in response to that extra issuance. So the problem there might be that you get a kind of self-defeating rise in borrowing costs as a result of trying to do this extra borrowing.

4:01So that's why the Treasury has pushed back on this idea and said that its fiscal rules are non-negotiable. And there's very much a debate within the government and from defense industry groups and from unions about the best approach to take. So real tightrope walk that you've described. Are there any options on the table that markets would be okay with? Gilt investors would be comfortable with anything that does not lead to a substantial increase in issuance. So if there were other models for the extra spending where there was some kind of private involvement or some kind of multilateral arrangement with UK allies to help fund that defence spending, that could potentially go better with the market.

4:45Now, it's not as simple as saying we should do whatever the market wants, but given that the gilt market does set the cost of government borrowing, which affects all of the government's kind of spending obligations, then there's a risk to kind of ignoring the concern there is around the additional issuance. So anything that means a meaningful rise in borrowing is just something that the government is going to be really careful about, given how it might go down with the investment market. That's the FT's Ian Smith in London. Thanks, Ian. Thank you for having me.

5:21Remember last Friday, we told you about a report from the New York Fed? It said U.S. businesses and consumers are shouldering the bulk of President Donald Trump's tariffs. Well, now the head of the White House's National Economic Council wants the people who wrote that paper to be, quote, disciplined. Kevin Hassett described the research as an embarrassment, and he asserted that it failed to capture the full effect of the tariffs. Hassett was in the running to be the next chair of the Federal Reserve. His critique is the latest attack from the Trump administration on the U.S. Central Bank. The New York Fed declined to comment on Hassett's remarks.

6:02Investment banking is a notoriously demanding industry. It's known for paying top dollar in exchange for grueling schedules and unsociable hours. Now, a lawsuit threatens to challenge that culture. One former junior analyst is suing the company she was fired from over the right to sleep. Kay Wiggins is the FT's legal correspondent, and she's got all the details on the case. Hi, Kay. Hi, Mark. All right, so this case centers around a woman named Katherine Scheiber. What is this lawsuit about? Yeah, so she was a junior banker at Centerview, which, you know, it may not be a sort of household name, but it is a kind of very elite, very prestigious M &A advisory firm, which is based in New York.

6:46And she was staffed on a big and very time-consuming, demanding deal. The culture in the bank was that very seriously long hours were being worked all around her. One night, she logged off after midnight, and that resulted in a conversation where she was asked to give people more notice if that was what she was going to do. She presented a medical note saying that she had a condition that meant that she needed to be able to get eight to nine hours sleep per night to help manage that condition. The bank initially tried to accommodate that and give her a kind of guaranteed window in which to sleep between midnight and 9am.

7:29That worked for a couple of weeks, at which point the bank called her in and said it was terminating her employment because it was no longer practical. So Kay, this case is probably going to hit a nerve for people working in the industry because there has been this long running debate about working conditions, right? So this is a far broader issue across investment banking. And we've seen this, especially since the pandemic, when there was a big deal-making boom and bankers were working very long hours, often from home during COVID. There was a backlash against it in that time. A group of Goldman Sachs junior bankers put together a PowerPoint presentation talking about how many hours they were working and how exhausted they were.

8:08That went viral online. It kind of created this whole reckoning in the investment banking world where people started thinking about whether the culture needed to change. You know, and some banks did things like brought in Protected Saturday where people wouldn't be expected to be working or available to work or they were capping weekly hours, that kind of thing. So there was a reckoning across the industry at that point. It seems like there's this unwritten rule that employees work a ton of hours. They have very little work-life balance, but in return, they get paid massive salaries. Yeah. One of the big questions will be whether the ability to work all of these hours is essential.

8:51The bank will argue, yes, that is essential. There's going to be like a jury of like ordinary New Yorkers who have to decide on this if the bank is to be successful here. It will have to convince them that it is actually essential rather than just a kind of cultural norm. And I think this is where this really interesting like generational question comes in, where sort of perhaps an older generation might say, this is how it's always been done, kind of get used to it. And what we've seen across the industry from Gen Z is increasingly they are prioritizing well-being, mental health, and they're willing to ask questions about whether things need to be that way.

9:26So it sounds like Scheiber is not alone in her discontent with the current working culture and investment banking. And we should just point out that this lawsuit has not gone to trial yet. It's due to go to trial next week. Kay, how unusual would it be for an argument like this to go to trial? Very unusual. I spoke to a lawyer about this who specializes in this field. And what she told me was that it is very rare for a case like this to make it to trial. Very often, judges in this kind of case will throw them out at a much earlier stage in the process. Okay, if this does go to trial next week, what kind of precedent would it set?

10:03And what additional precedent would it set if the judge rules in Scheiber's favor? One of the arguments that is likely to be brought up in the trial is that Scheiber's view is that she was never told, the bank never communicated to her that it would require her to be available all throughout the night. And so one thing that may well happen as a consequence of this is that investment banks might feel that they have to start being a bit clearer, a bit more transparent upfront with their junior bankers about what the expectations of them are. You've got to imagine that other banks will be paying attention to that.

10:35And that is one of the messages that they will take away from it. That's the FT's Kay Wiggins. Thanks so much, Kay. Thanks, Mark.

10:48before we go the news moves pretty fast these days not only is it hard to keep up but it can be hard to make sense of too the ft doesn't just bring you the what of a story we also spell out the why of it all and right now you can get to the heart of all of our coverage with a discounted digital subscription to the ft just go to ft.com slash briefing sale we'll have that link in the show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.