At minimum, there needs to be a law that requires banks to identify to the customer the specific transactions that led to the closing of the account. And if there’s no prosecution related to these transactions after a year, the ban gets lifted.
Innocent until proven guilty, not guilt until proven innocent.
Being de-platformed from financial infrastructure is tantamount to being economically jailed and instantly forced into life altering poverty. This isn’t some silly app you’re getting banned from…
Banks shouldn’t be allowed to ban anyone. They should need a court order to lock up/ban someone from access/mobility of their own property.
That said, this is likely a narrow lens statement. The problem is more complex around governments/judicial systems incentivizing banks to behave like governments. In reality, our regulatory agencies need to do their jobs: regulate/enforce and be held accountable when they don’t (instead of passing that enforcement on to banks through threat of liability).
Banks are creatures of government, they're never going to be private competitive businesses. The solution is to recognise this and subject them to the same oversight that government is: FOIA, the equal protection clause, all of that good stuff.
Seriously? Nope. Nope. Nope. No.
Remember 2008.
This gets pretty tricky - telling a bank they need to keep dealing with customers that cost them tons of money and are actively trying to defraud them (and other customers) seems awfully harsh.
I think the government should provide a basic bank account to anyone who wants one though.
It would probably be more reasonable to make some sort of tightly regulated basic bank account that banks would be required to offer in some situations.
Nobody would be happy, but hold all deposits for a long period, so that they fully clear. Possibly restrict the sources of funds; maybe a basic bank account can only accept payroll and government deposits, maybe a limit of N unique payers per unit time. Etc. Social security and state benefit programs have specialized accounts for people without other bank accounts, because it works better than sending checks in the mail, maybe one of those programs could be slightly more generalized.
Allow a bank to refuse to service an otherwise qualifying basic banking customer only if the bank goes through a court process and/or is accompanied by actual criminal charges filed.
Yeah, I'd be ok with this. Require banks to provide some MVP 'bank account' to anyone that isn't already declared banking-persona-non-grata by the courts.
So, the legal system? The only reason regulated banks should be able to deplatform someone is if they also have a legally actionable case, and they do legally action it, and the person is found guilty.
If being banked is so critical (and it is, in modern society) then it shouldn't be handled solely by private enterprise. Government needs to step in and offer basic services.
Strawman all you want, but there's a big difference between social media and finance.
Banks have special rules because they are infrastructure. A cafe needs a bank but not vice versa.
Private companies should be allowed to print private notes. (Of course, with distinctive designs etc. We don't want anyone fooled into mixing them up.)
I would expect private issuers in eg the US to denominate their notes in USD. Or if USD were to abolished tomorrow, they would probably denominate in Euro. Failing that, I would expect a return to denomination in gold before denomination in car fleets.
Backing is a different issue. Walmart could denominate their notes in gold, but back them with the strength of their overall balance sheet and operations. Just like banks today denominate the contents of your bank account in USD, but back them with their balance sheets. (And have only a small fraction of their assets in USD reserves at the Fed or vault cash.)
> Problem is people getting ripped off or rugpulled.
That wasn't much of a problem historically.
Stocks are (in practice, effectively) denominated as fractions of company.
What I am describing is closer to bonds. They are denominated in currency, but still backed by the value of the company.
Bonds (or something equivalent to bonds) are used all the time to pay people. Eg someone who gets paid at the end of the month accrues something like a bond throughout the month. The company owes her more and more of something denominated in currency, not in stocks. At the end of the month, the company redeems that IOU by transferring currency.
Paying people in stocks is much rarer.
Importantly, the base pay of most people from one month to the next is fixed in terms of currency, not in terms of a specific number of stocks.
I don't think "you can't fire a customer" is a good one though.
There's also a distinction between not being able to use a particular bank and not being able to use any bank. It's important that everyone be able to use some bank, but not that everyone can use Chase, but it's tough to regulate that. Again, this is why I see a government option as necessary.
Locking up the money is basically theft, but I'm sure the law and regulations say otherwise.
Say, I have 3 millions somehow deposited in the $bank_where_i_put_my_shady_money, I want to take/move the money, but doing so will raise some eyebrows, so I deliberately try to debank myself so that I can get all my money cash OR move it to $partner_bank
Absolutely agree. Holding and transferring money should be a basic human right.
Example: In the EU all internet transactions require a second factor, it's annoying -- but typing in a credit card number is already crappy UX.
But making identify theft harder could also reduce risk of keeping clients with abnormal patterns. Since the bank will have more confidence that the customer isn't subject to identity theft.
Obviously, there are more options. Maybe, banks should be held more accountable.
But increasing the bar for fraud by having a strong online identity system could probably raise the bar a lot.
That presumes (and requires) a very specific risk model by the banks.