This weekly roundup thread is intended for all culture war posts. 'Culture war' is vaguely defined, but it basically means controversial issues that fall along set tribal lines. Arguments over culture war issues generate a lot of heat and little light, and few deeply entrenched people ever change their minds. This thread is for voicing opinions and analyzing the state of the discussion while trying to optimize for light over heat.
Optimistically, we think that engaging with people you disagree with is worth your time, and so is being nice! Pessimistically, there are many dynamics that can lead discussions on Culture War topics to become unproductive. There's a human tendency to divide along tribal lines, praising your ingroup and vilifying your outgroup - and if you think you find it easy to criticize your ingroup, then it may be that your outgroup is not who you think it is. Extremists with opposing positions can feed off each other, highlighting each other's worst points to justify their own angry rhetoric, which becomes in turn a new example of bad behavior for the other side to highlight.
We would like to avoid these negative dynamics. Accordingly, we ask that you do not use this thread for waging the Culture War. Examples of waging the Culture War:
-
Shaming.
-
Attempting to 'build consensus' or enforce ideological conformity.
-
Making sweeping generalizations to vilify a group you dislike.
-
Recruiting for a cause.
-
Posting links that could be summarized as 'Boo outgroup!' Basically, if your content is 'Can you believe what Those People did this week?' then you should either refrain from posting, or do some very patient work to contextualize and/or steel-man the relevant viewpoint.
In general, you should argue to understand, not to win. This thread is not territory to be claimed by one group or another; indeed, the aim is to have many different viewpoints represented here. Thus, we also ask that you follow some guidelines:
-
Speak plainly. Avoid sarcasm and mockery. When disagreeing with someone, state your objections explicitly.
-
Be as precise and charitable as you can. Don't paraphrase unflatteringly.
-
Don't imply that someone said something they did not say, even if you think it follows from what they said.
-
Write like everyone is reading and you want them to be included in the discussion.
On an ad hoc basis, the mods will try to compile a list of the best posts/comments from the previous week, posted in Quality Contribution threads and archived at /r/TheThread. You may nominate a comment for this list by clicking on 'report' at the bottom of the post and typing 'Actually a quality contribution' as the report reason.
Jump in the discussion.
No email address required.
Notes -
So it appears that JP Morgan may have allowed Jeffrey Epstein to continue using their financial services, so of course the Times leads with the most bombastic possible version of this claim. One could imagine an alternative headline like How JPMorgan Conducted its Usual and Customary Business. Probably there are intermediate versions of this headline that are closer to neutral.
Headlines aside, right wing media is picking it up because all the Epstein stuff draws lots of clicks but I'm wondering (and hopefully I'm not alone) whether this is fundamentally about getting upset when banks don't drop unpopular clients even when their relationship has nothing to do with the clients' bad behavior.
That is to say, contra the Times, JPMorgan didn't enable Epstein's crimes in anything but the most useless sense of the world. Sure, he used money from the banks to pay people -- but I'm sure lots of criminals withdraw money from a Chase ATM in the commission of a crime, which hasn't (till recently) been laid on the bank.
The other claim is that his friends in the bank intervened when some transactions were flagged (for what, no one really explains) but this only deepens the original question: even if he was guilty of sex crimes, that doesn't imply that his financial dealings weren't in order. It's not money laundering or fraud to pay for underage hookers -- it's child prostitution which is illegal in its own right.
Ultimately where this seems to end is back to a place where banks rightly fear that they are gonna be next on the Times' hitlist because they didn't drop a client fast enough.
I don't think people should be debanked at all except for organised crime and terrorism. Even then I would expect justice dept or fintrac officials to make that call and not the banks or credit card companies themselves.
It should be know your client > report suspicious activities to the authorities > authorities ask judge for approval to debank > banks debank.
Not lobby group lobbies visa/mastercard > banks debank or even politicians ask banks to debank for expedient political reasons (Canada Truckers) > Banks debank.
Banks are like power and water utilities. Its not something you cut off in a modern society without very good reasons.
Plenty of people get power or water cut off for non-payment, which falls a long way short of organised crime and terrorism. Plenty of people have credit bad enough that they can only get power with a prepayment meter. The equivalent is a basic bank account which can't be overdrawn (and therefore doesn't come with a cheque book, only a debit card - with the shift to zero floor limits the number of places that debit card can't be used is now quite low). You can't run a business with a basic bank account, and you can't run a business with electricity off a prepayment meter - in both cases this is both against the rules (the social contract that says regulated businesses can't shun dirty poors only extends to consumer services, not business ones) and impractical given the lack of credit.
The vast majority of business debankings are for credit control reasons, both of the "new information means this business is no longer considered creditworthy" and of the "new information means that this business is of a type which we do not bank because we lack the special skills needed to assess its creditworthiness" types.
The level of protection the banking system offers to normies who are victims of dodgy businesses (including but by no means limited to credit card chargebacks) is only possible because the system tries to keep dodgy businesses out.
You can keep denying it, but the evidence is quite clear that political debankings have been and are being done under the cover of financial reasons.
I agree with you that the number of political debankings strictu sensu (i.e. a banking relationship is ended because the bank finds the client's political views, as opposed to the nature of the client's business, obnoxious) is probably greater than zero. But it is rare, unless you count "debankings" by Paypal. Debanking of disfavoured industries is absolutely a thing, and normally involves a combination of financial and political considerations - they are hard to separate in practice given the modest positive correlation between "chooses to make a living running an antisocial business" and "inclined to dishonesty in their financial dealings" and between "industries my staff don't want to bank" and "industries my non-evil customers don't want me to bank." Sometimes it involves improper regulatory pressure - Operation Chokepoint was very much a thing, and the Biden-era Fed unsuccessfully tried to do something similar with the fossil fuel industry.
The point I am trying to make in my posts is that if you are going to legislate about debanking, your legislation needs to get the common cases right. A law which puts a burden of proof on banks which end a client relationship is, regardless of the sponsors' intent, primarily a law about credit risk management - namely that banks have to do it upfront at the point of account opening. The main impact would be to make it harder for people who are not already rich to open business bank accounts.
Perhaps I’m totally off-base here but to my mind the main service that perhaps 75% of people need from a bank is to serve as a trusted ledger who can take transactions, update a stored value, and make transactions. This is absolutely necessary because it is now broadly impossible to live a cash-only life without seriously constraining your activities.
Given that the software has to be developed at scale anyway for purpose of dealing with standard customers, it is my further understanding that providing these services to any client or business (with all standard regulatory oversight) is essentially free. If you remove the ability to run an overdraft, there is basically no risk.
Am I am wrong about either of these things? If not then what reasons are there, if any, for not legislating that banks must open super-basic accounts for any person or group who asks and must continue providing that service unless the client or the government says otherwise?
This is not true. The financial industry provides normie customers will significant protection against various kinds of frauds in a way that is incompatible with allowing credit risks to continue to bank. It is not a ledger, it is a ledger with a complicated system of dispute resolution w.r.t entries on that ledger and the implicit line of credit that covers the total potential cost of those disputes.
You could imagine an "all transactions are absolutely final no matter what" kind of a financial system, akin to a blockchain. This is broadly incompatible with current expectations regarding fraud and disputes. It's also broadly illegal (see CFPB Reg E) to offer to consumers in the US. And having reasonable experience in adjacent fields, I'm pretty sure it's not a great idea.
I see. I don’t have much to say except thank you very much to you and @MadMonzer for your detailed replies. I will go away and think about it some more.
More options
Context Copy link
More options
Context Copy link
For individuals, requiring banks to offer basic accounts to anyone who isn't on a blacklist of people convicted for bank fraud would be a plausible regulation - it is definitely something that exists in the UK. The question is whether you can make a basic account which is both safe for a bank to offer to dodgy people and useful enough that dodgy people will use it rather than continuing to rely on cheque cashers and prepaid debit cards. (And in any case, a rich person whose account was downgraded to basic status would probably consider themselves debanked and complain to the press about it - as Nigel Farage did)
Given modern technology, you can set up an account that is almost impossible to overdraw with outgoing payments - the problem is overdrafts caused by reversal of incoming payments. Incoming cheques can bounce for all the usual reasons. Bouncing cheques typically bounce within a week, but in the US there is no legal limit on how late a cheque can bounce. If you protect yourself against bouncing cheques by putting a week's hold on incoming cheques (incidentally, illegal in the US although that rule could be changed) then the typical low-credit-score customer will go to their local cheque casher to avoid the hold. ACH payments and wires are reversable for alleged fraud, again with no time limit, so for a customer who is a sufficiently high fraud risk can't be banked safely at all.
For businesses, the risk of reversed incoming payments are a lot higher (particularly if you accept credit/debit cards which are subject to chargeback, but also because businesses don't get most of their income from payroll and government welfare, which are the least likely payment streams to involve NSF cheques or reversals for alleged fraud. An account which won't let you accept card payments and puts a 5-day hold on incoming personal cheques is basically useless for a business, and even if it was a business there is still a risk to the bank if the business disappears after receiving a bunch of allegedly fraudulent electronic payments. There isn't a "basic business bank account" which is actually useful for businesses and which can safely be offered to dodgy people.
We're right now in a situation where being a family member of someone who starts a right-aligned social network is reason enough to be debanked. Your protestations that there's no way to avoid that without putting undue pressure on banks to accept deadbeats is... unconvincing.
It'd be a different situation if banking weren't such a heavily regulated industry, with high barriers to entry and a small pool of people who can actually do it. But it is, and that doesn't look to change.
I think the heavy regulation is not working in the direction you imagine: that regulators decided (for better or worse) that the tradeoff would be that consumers are protected from deadbeats and that banks would eat those costs.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link