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What the Kentucky Derby doping scandal means for horse racing
Medina Spirit, the 2021 Kentucky Derby winner, failed a drug test after the race, putting his victory — and horse racing's integrity — in jeopardy.
Why it matters: Medina Spirit is Hall of Fame trainer Bob Baffert's fifth horse known to have failed a drug test in just over a year.
Details: The drug found in the horse's system was betamethasone, a steroid used to reduce pain and swelling. These kind of drugs can mask injuries, often leading to injuries or death.
What they're saying: Churchill Downs on Sunday suspended Baffert, who insisted that Medina Spirit had not been treated with the drug.
- "I don't feel embarrassed, I feel like I was wronged," said Baffert. "These are pretty serious accusations here, but we're going to get to the bottom of it and find out. We know we didn't do it.”
- He said he plans to run Medina Spirit at Saturday's Preakness Stakes in Baltimore, the second leg of the Triple Crown.
- Preakness officials said they'll make a decision about the horse's eligibility after reviewing the facts.
The state of play: Medina Spirit can't be disqualified until a second sample, collected at the same time as the first, confirms the result. Those results are expected soon, per NYT.
- If the positive test is confirmed, Baffert can appeal. If he loses, the runner-up, Mandaloun, will be declared the winner.
- Medina Spirit would then be stripped of his title and the $1.8 million winning purse, joining Dancer's Image (1968) as the only Derby winners to receive drug-related disqualifications.
The big picture: This news comes as horse racing, awash in doping scandals, prepares to implement the Horseracing Integrity and Safety Act.
- The landmark legislation will establish an independent organization to regulate medication policy, which is currently handled differently by each state.
- It's set to take effect next July, and would see the Federal Trade Commission write rules and the U.S. Anti-Doping Agency enforce penalties.
The last word, via SI's Pat Forde (subscription):
What bank's booming profits say about the economy
Some of America's biggest banks are making more money now than they were before the pandemic hit.
Why it matters: Quarterly earnings out this week hint that the worst economic scenarios haven't yet come to pass. Still, executives are warning there could be a rocky road ahead for the economy.
- These banks are the biggest lenders in the country and have insight into the financial health of millions of Americans and businesses. So analysts often parse these quarterly results for indicators of how the economy is doing.
What they're saying: "The consumer is in reasonably good shape for whatever we may face next," Jennifer Piepszak, JPMorgan's chief financial officer, said during a call with Wall Street analysts this week.
- "Having said that, there is a significant amount of uncertainty about what we may face next."
By the numbers: JPMorgan reported $9.4 billion in profits — 4% more than it made this time last year.
- Goldman Sachs, which has way less exposure on the lending front, made $3.6 billion, nearly double what it made in the same quarter a year ago.
- And while Wells Fargo and Citigroup saw a drop-off, they're both still profitable. Citi made $3.2 billion, while Wells Fargo raked in $1.7 billion.
What's going on: Banks were buoyed by strength in the Wall Street-facing divisions: including the parts of the company that, for instance, are focused on trading or help take companies public.
- Also helping results: There haven't been widespread loan defaults, despite millions of Americans being out of work and scores of businesses operating at reduced capacity.
- JPMorgan, for example, reported $1.2 billion in net charge-offs — or loans it doesn't expect payment on — which is less than it reported this time last year.
The state of play: Last quarter, the biggest banks set aside a whopping $24 billion to cover potential bad loans. This quarter banks added to those reserves, though at a slower pace — a sign that executives are still preparing for defaults down the line.
- Bank of America released some of the money set it previously set aside for consumer loan losses, noting an improving economy.
- The bank's CEO, Brian Moynihan, said on Wednesday Bank of America is seeing a return to "a generally sound underlying economy ... [b]ut we won’t get there until we have fully addressed the health care crisis and its associated effects."
Between the lines: The banks would have raked in even more money, were they not dealing with the aftermath of a slew of scandals.
- Wells Fargo took a nearly $1 billion hit inexpenses related to the fallout of its fake account scandal.
- Citi had higher expenses thanks to a fine from a regulator in response to management failures.
- JPMorgan also took a charge to help cover a $920 million fine for rigging commodity markets between 2008 and 2016.
The bottom line: Executives largely attribute the strength to stimulus measures — and they're calling for another package to help shore up consumers.
- Another stimulus package "will create more buffer to take us through hopefully the other side of the tunnel, without too much pain and destruction to bank balance sheets," with loan defaults, Mark Doctoroff, a bank analyst at MUFG, tells Axios.



