Seeing like a bank
bitsaboutmoney.com
bitsaboutmoney.com
This article walks through it in how banks work internally. Much more painful is https://www.bitsaboutmoney.com/archive/the-waste-stream-of-c..., which shows how rules that supposedly protect poor people from abuse, in practice only help those with access to the skills of the professional and managerial classes.
I wish there was a way to summarize his point of view and explain it to people. Part of the problem is that every system where it happens is very complicated. And the complications are exactly why you need professional and managerial class skills to get priority access.
(I save up my karma points precisely so I can burn them on comments like this.)
However listen to his explanations of the incentives, benefits, and downsides. Then remember that he was working within a company that had the exact same incentives (eg same regulatory regimes), who was going to be hiring people out of the same financial system. And remember that there are parts of this that he think really make the world better.
Therefore the expected result really should be, "Somewhat better iteration on the basic thing that everyone else does." And so it is no surprise that it would include enough of what you don't like that you'd see it as "exactly the same system".
> Although it certainly doesn’t feel like it to people who hit edge cases, the tiered support model is a technology which took us decades to popularize and which made the world much better. It brought down the cost of financial services and supported product innovation which would have been impossible under the mid-century bank staffing model. We could not have credit cards or discount brokerages without the tiered support model. The biography of Charles Schwab makes this point persuasively at considerable length: competent telephone operations were instrumental to bringing equity ownership to the middle class. You should prefer a world with credit cards and discount brokerages to one which doesn’t have them, even as you listen to hold music occasionally
Tiered support is here to stay because tiered support is cheap and resistant to the "unintelligent customer DoS" (my words, not his). As he points out, you can have professional troubleshooters with the capability, authority, and expertise to troubleshoot the problem, but their labour costs in the hundreds of dollars an hour.
I personally think there is a reasonable model of the world where customers explicitly pay a hundred dollar fee to have a highest-tier escalation to the office of the CEO/equivalent troubleshooting team and have them take a look at your case, but this is a model that has not yet been developed or in wide use anywhere.
In that world - those who have QualityPoints can exert far more escalation force on all parts of their life (change the traffic signal now for 10 units) than lower level folks. Your comment reminds me of a world where paying fees gets you faster and better access. Sadly - Sounds familiar.
[0]https://www.bookbrowse.com/reviews/index.cfm/book_number/406...
It is tricky. On a first order I agree with you, but then i think about second order consequences: What if the escalation route becomes profitable? Will that incentivize the company to keep the pain points, or perhaps even engineer more of them?
Also, would it be clear what does the money pays for? Imagine a situation where the computer says no (that is the system makes a decision adverse to the customer’s interest, such as closing an account, not approving a loan, security freezing assets etc), and the costumer pays the fee to get it escalated. The CEO office person reads the case, applies their troubleshooting skills, and they independent of the computer come up with the same answer. Now from the point of view of the costumer it feels they paid hundreds of dollar for nothing. From the point of view of the company they gave the customer what they promised: spent valuable resources on escalating the customer’s complaint. If they give the fee back to the customer they are loosing money, if they don’t they further antagonise a bad situation. Which can have reputational effects, and or wasting even more resources.
And this might sound like an edge case, but if the system is well operating these kind of cases will be dominating. Simply because if the CEO’s office overrides the normal processes too often then either they are profiting from the escalation route (see first point) or the normal system is faulty.
How would you dodge these two bullets?
This already exists in a sense. High net worth clients/well established business clients with long term relationships do get priority remediation and troubleshooting. The cost is just much higher than $100.
As someone that's managed technical teams for 3+ decades, I've seen the deterioration, first hand. It's all about costs/profits.
C-suites view support (IT in my case) as a cost-center, without seeming to understand that our infrastructure is what all revenue travels over. We are a cost, but a cost with a purpose. In the pursuit of ever-higher numbers, they continue to replace local staff with 3rd party entities who are incentivized to close calls, not solve problems. These 3rd parties often have wholly unqualified staff. In some cases, the staff is qualified, but doesn't have the access or the information required to address the issue.
Let's not go to paid access to support. With humans involved, in less than a decade, there will be 1 person answering the "poor folks" line, that you'll wait for 2 hours to speak to, while being told every 30 seconds just how important your call is. The rest of support will be "generating revenue" by resolving problems for better-heeled clients.
I think that's well understood as cost-centers go. What's also understood is that improving that infrastructure beyond a certain point doesn't change how much revenue travels over it.
It works, so it doesn't need to be changed is how most infrastructure deteriorates. Ask me how I know this. :)
Old, under-performing and flakey switches do have a negative and potentially disastrous impact on the business, but if you replace the network with "gold-plated" high-performance 100GbE switches, you're not likely to see much more upside than if you just had properly sized and maintained switches.
Or maybe they're from the same source, and the author just chose different aesthetics for the different articles. Quite nice, in any case.
Maybe the world's problems and solutions are inherently too complex for someone without those skills to have any hope of navigating. Maybe the only real solution is to use Patrick as an example for everyone and ask/demand that professionals spend some amount of time advocating for people less fortunate/educated/knowledgeable than themselves?
As a former CTO for the Americas region of one of the world's largest banks', which owns consumer banks and divested one recently, I couldn't comment here on the prior article that he's writing about, but I have linked this particular patio11 discussion to a few people.
Take from that what you will.
// Caveat: @patio11 has published some takes this year that are less forwardable (mostly asserting reasons or rationales for things that ring true at several layers down in a bank, but are not actually what's at play). I suspect it's partly from the level or siloing of who he's interacting with, and partly from the nature of some types of banks he may have spent more time with, rather than other types of banks, such as G-SIFIs:
https://www.fsb.org/work-of-the-fsb/market-and-institutional...
That said, industry executives interested in improving things would do well to read all of it, because "perception is reality", as seen by @patio11 through a different lens than usual.
Even if differently attributed, you can likely derive what you'd need to work on to alter that perception, leaving your bank the better for it.
Social scientists of various stripes write about these kinds of things quite often. I don't know much about the banking sector, but there are lots of authors writing accessible, detailed books that look into the intersection of politics, technology, society, identity, and other factors.
I think part of what makes Patio11's writing so attractive to the HN crowd is that he writes with technical rigor in a way few social scientists can manage. A lot of social science is, in my opinion, nibbling around the edges of a lot of the "stuff" in digital worlds - but there is a lot to get through and it's not a huge field! So reading a lot of the source texts can be kind of frustrating: good stuff, but if they're describing a field you work in there will probably be parts it seems like they got wrong. Patrick, on the other hand, does get the details right - and the general sociology.
[1] He's also been a CIA asset! A man of contradictions (or patterns - there are a surprisingly large number of good Anthropologists who are arguably bad humans).
https://www.amazon.com/Seeing-like-State-Certain-Condition/d...
Highly recommend, though glance at summary to confirm you'll enjoy / benefit:
My city's newest library is an art piece with less books than any other here, to be fair.
It's an incredible resource.
Organizations are made of teams. That sounds super obvious, but it means that any change request is going to go to a team (or teams).
From the outside, it looks like a corporation has effectively unlimited resources; on the inside, any particular team has very limited resources. The team may have just been downsized, lost a lead, been reorganized, etc.
0: Better than I currently can, not better than Patrick.
Funny quote:
> That retail user is extremely unsophisticated about the bank account, finance in general, and frequently many other things in life.
I work with a lot of large corporations and we have constant problems with the software I support because the imperative is to continually drop operational costs. We'll have a team we work with that is well trained, understand the software well, and keeps the software working at near 100% capacity.
Then suddenly one day they are all gone and you get the offshoring team that knows nothing about the specialist software they are attempting to support, if they have the capability to actually turn a computer on is surprising. Software availability drops significantly having direct impact on deliveries, costing god knows how much in some of these companies. Support on the vendor side (my side) turns into a huge expensive mess because now you're now writing instructions to the level of "when you take a poopy, remember to flush and pull your pants back up".
Working for a cost center vs. a profit center will make a huge difference in your professional life.
Now, without passing too much judgement, I'm starting to feel the unease comes straight from the cost/profit center distinction, as another way to define it is: profit center is what you do to get the money, so you can spend it on the cost center. The former is more exposed to market pressures, thus more likely to evolve into something ugly.
I also believe this is a hard problem to solve. The partitioning of an organization's resources into teams is inherently messy and inefficient. One has to consider internal politics, egos of middle managers, or preferences of individuals when staffing teams within an organization. The end result is often far from what's the best for the organization overall.
I see this everywhere not just at banks. A common workflow is horribly broken with dozens of habitual workarounds and the developer could fix it in a day if they knew about the issue. I even see it between engineering teams when there are cross-team dependencies. It is really hard to train people to not put up with chronic pain in their workflows!
Often not even enough to identify that there ever was one in the first place.
Ugh, and on the subject of banks computer operations. Every single department is in deep blame avoidance mode. It's not "find and identify problems" mode, it's "It wasn't me" mode. We had our application performance drop to almost zero (like we dropped to disk operations per minute IOPM) I spent hours telling the customer, this is your infrastructure. So we got infrastructure teams on the call trying to figure out where it was. Not a single one of them were helpful "Everything fine, it's not us" was the first thing out of their mouths and the second was "We didn't change anything".
It took 10 hours of sitting on a call over 2 days to get the NAS team to admit they turned on anti-virus on the NAS side and that the machines were in meltdown mode because the CPU was off the charts. The preceding people didn't even look at the metrics before coming back with a "it's not my problem, everything is fine" response.
I recently had someone suggest that they needed 1ms latency cross-continent. I explained patiently that the laws of physics have to change for them to hit that number.
I am not even a network engineer!
Once I had to write a root cause analysis report and it basically explained how TCP works.
Noisy neighbor in inadequately-isolated, shared-tenancy models is just the worst.
You said words. And I totally, 100% understand them. But, like, for the plebs that are totally not me, could you elaborate on what you're talking about here? I^WThey would like to understand.
“It’s you, we’re receiving faxes from everyone else” (how would they know?)
“Nooo, it’s you, everyone else is receiving our faxes”
I think this is a good constraint in general for banks to have, and its definitely harder to change a workflow under these constraints.
> Every single department is in deep blame avoidance mode. It's not "find and identify problems" mode, it's "It wasn't me" mode.
This tends to happen in large organizations, and is incredibly toxic to productivity. The most extreme form is when you get fired (or otherwise censured) for fixing something because "You were in charge of the thing that was causing all this trouble?!"
I go talk to the Ads people about this specifically and they say "yeah it's a pain, but this is the way the developers need it".
Turns out both parties had been wanting a better way which was pretty easy (3 different page/ad placement templates), but neither had bothered to express this to each other.
I spent an hour or two a week dragging "impossible" things out of them and fixing them. They were very happy and ascribed wizard-level powers to me.
It's learned helplessness. In some organisations when you ask for things like that you just get told system says no. If that happens enough, you stop wasting time asking. It's really not irrational either, it's just demotivating to get denied again and again for reasonable requests.
The problem with this is, we've known for 30 years that a system that calls you back is better than a system you wait on hold for. If they can't even get something this basic right, then I guess it's good that banks will eventually, someday be software competent, but I'll be long-since dead.
If someone like a banks calls you, you need to call back from a different phone line, using a number that you look up before giving private information.
Note that most of the time the above doesn't matter, as banks rarely need to call you to get private information. "did you buy X" isn't private - whoever is asking already knows you did: even if they are a scammer you have already lost - if you didn't you need to hang up and call the bank to arrange getting a new account now that your old one is compromised. The only other time that matters is why you know who will call and why (if you just applied for a mortgage you expect the loan officer to call but you also know exactly who that is)
WTF? That's completely insane! Where is that?
And please tell me that you can hang up the call if you reboot your phone, at the very least!
That "feature" was copied into the digital world. Except now there's a very short timeout where after the recipient hangs up, the connection is terminated.
But a lot of customers don't actually want that. An established connection feels safer than a promise of a future connection which may fail to happen for various reasons.
This is a problem from banks that are supposed to pay attention to large chunks of your money. No? Obviously? A little? Yeah it is.
Similarly alleging savage competition is self serving once you move beyond the most common low-balance checking account. FATCA for example took care of competition when it comes to running european bank accounts for US residents. Or try to borrow money against your financial assets - in the US - and find out how much competition there is there.
And yet, there we are. An actual mainstream (among the top largest on the planet) bank where 1-3 times a year, I roll my eyes, spend time reassuring myself that it's okay-enough, figure out how to present that nonsense to the IRS, make a note for my own tax reporting purposes and so that I don't have to do the research again after I forgot, and fiinaallyyy move on with my life. I'm sure that ledger works out for the bank.
As a developper I do this on the side of regular dev work for my job at company with a lot of technical debt and antiquated systems. This is my guilty pleasure to act on very weird edge cases or escalations. Sometimes it's aggravating looking at what the customers go through as CS agents are obviously confused when the case they are handling goes out of the norm.
I've experienced this one directly: I ran into an issue with a large transfer between banks a few years ago, and watched with a mixture of amusement and anxiety as the branch employee was unable to prove his identity to his counterpart on the line. He was supposed to share some kind of OTP to prove that he was in front of a branch computer, but whatever microservice was responsible for generating and/or delivering the OTPs was offline.
It's rather difficult to change one's bank, and banks actually put up hurdles to make the change difficult. E.g. moving loans can have huge "rearrangement fees", loan guarantees may be almost impossible to transfer and the bank account info is in quite a few places and having it wrong can cause missed payments.
A good example is that when it was proposed that one should be able to transfer their account number to another bank (as telecoms have to do for phone numbers here in Finland at least), the bank lobbyists said this is technically impossible, which is of course ridiculous. And that we still this day and age have to wait for days for a bank transfer to clear.
There are some new banks (e.g. Monzo) that once you use them, it really shows that most banks just suck.
When you have literally a license to create money out of thin air, you can be really incompetent (except in lobbying of course) and still make hand over fist.
Well, you can loan out some amount of money that you don't have, hopefully get it returned to you with some interest.
No, the gov/central bank will give it to the people you borrowed money from as a bailout.
Your equity will be zeroed out, your executives will all be fired, and your customer accounts will be fed to another bank.
May or may not be technically free money, but for sure Citibank doesn't hand out loans to bankrupt customers on such terms.
The gov could have e.g. let Citibank go bankrupt and just take it for free. Like banks do to their customers.
If the money couldn't have been paid back, the shareholders wouldn't have been diluted.
They would have been wiped out.
And also the entire economy would have collapsed, and we'd all be trading ammunition for bottlecaps, instead of merely living through a nasty recession.
Which is why they backstopped it. Yes, it would have been cheaper to let Citi fail and nationalize it, but it wouldn't have been cheaper to then have to deal with all the contagion and all the other businesses that would have exploded because of it.
Anyway, a "bailout" is when you give money to equityholders. They often lose money in situations people call "bailouts" even though they're literally the opposite.
There's a deposit in the other bank, along with the payment. Both of which are "money."
So, a bank can create money from thin air by making a loan, but typically not for themselves. It happens in a different bank.
We don't say that only licensed restaurants can cook food.
If you mean the bank account numbers used within Finland, sure, they can be changed. In the new system, there will be country-wide database which will now indicate which bank each account number is associated with. But your account also has an IBAN number, which has country and bank/institution identifiers. Those will have to change if a customer moves banks, absent an international finance law change.
And my understanding is that its quite common to use IBAN everywhere. So you won't really solve the problem. Just add another layer of complexity.
As far as I and a quick web search know, you can't make any of these refer to an account in another bank.
Is IP over MAC or DNS over IP just another layer of complexity?
So the added layer of complexity is that customers will have to change their number in some places but not in others. And banks will have to have a system of ensuring they match the right IBAN with the right local account number. Whenever this fails, there will be problems such as delays or money being deposited in wrong accounts etc.
This is unlike DNS over IP, which is universally/internationally agreed protocol which has 100% coverage. But even in that system, whenever you change your DNS settings, it takes a while to propagate, and in this time there are all sorts of weird errors. Cat picture websites can tolerate those sorts of errors. Financials institutions should not.
The bank numbering system was indeed a static routing code, like phone numbers were in old landlines. Why the former can't be changed but the latter could?
This is a common but slightly misleading interpretation of fractional reserve banking.
If I lend you 100 bucks and you lend those 100 bucks to someone else, you’ve “created 100 bucks” in a monetary sense. But it’s not coming from thin air, from an accounting perspective it’s just a debt moving from one person to another
The bank can rely on this fact. It only needs enough notes to support a likely amount of physical cash withdrawals each day.
yes, but they can't fiddle those numbers. if you deposit 100$, they can lend up to 100$. no more
Lending isn't limited by deposits, it's limited by central bank regulations.
Here's what the Bank of England says [0]
> if you borrow £100 from the bank, and it credits your account with the amount, ‘new money’ has been created. It didn’t exist until it was credited to your account.
> Regulation limits how much money banks can create.
Banks only need to maintain enough deposits to cover their liquidity needs - what they need to pay people withdrawing cash and what they need to transfer to other banks due to electronic money moving.
[0] https://www.bankofengland.co.uk/explainers/how-is-money-crea...
That's the basic logic: modern banking adds in a central bank that guarantees that it will lend enough to solvent banks at 5.5% to meet their customers' withdrawal requirements even if everyone pulls money out, banks treating each others' credit as equivalent in value to cash because they can always convert it, and a bunch of rules about lending needing to be banked with bank capital and other weighted assets to keep lending growth from being silly.
Right, but the bank also knows that people are doing the exact same thing with other banks; borrowing money from the other bank which will get spent immediately back at this one.
Banks are prepared to meet the difference in money in and money out, they're not prepared to meet the total volume of deposits. When the bank gets this wrong there's a liquidity crisis (or a bank run) which causes Big Problems.
no they're not, they're loaning out 100$ total. they never have loaned out more than they had on their books, it's not possible
"As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions."
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
The effectiveness of these "stress tests" remain to be seen. There was widespread trust for the "financial innovations" "pricing risks" until the system turned out to be a total scam.
This comparison doesn't make a ton of sense. Of course you can transfer your phone number - every phone number is mandated to be unique across all carriers. Bank account numbers are entirely internal to each bank and made up based on various arbitrary factors. What if the bank you want to move to already has an account with the same number as your account at your existing bank? How would that work?
The mobile phone numbers had the same system. Three first numbers signified the operator, but the whole number it can now be transfered to another operator.
This is not hard stuff. The numbers aren't magic, they're just identifiers. We're not bound to mechanical routers or card sorting machines anymore.
It's good that it's there and it is used widely, but it hasn't fundamentally made banks suck less.
I think the bottom line is that current accounts for individuals are mostly a "loss leader" product for banks. So, keeping costs down (e.g. the tiered support system) is very important. The actual money is made on other products (loans, mortgages) and especially on corporate clients.
And that's probably getting truer by the day when they don't need even fractional reserves to just create money.
"You can understand why, right? From their perspective, they were just going about their life, doing nothing wrong, and then for some bullshit reason the bank charged them $35."
I'm not sure it's quite right to blame this on math illiteracy. I think some people are still in denial on bank fees.
https://www.consumerfinance.gov/data-research/research-repor...
Payroll ACH transfers usually get deposited two days faster than they used to as well (1 day instead of 3 days).
This is essentially the central value proposition of our SaaS product - Providing less-skilled employees the ability to accurately conduct complex account and customer management activities in the branch environment. An "on-rails" style application experience that more-or-less forces you to take legal actions with the end customer.
Our most popular workflows from the perspective of bankers are the ones used most rarely - IRA rollovers, conversions, etc. The ones you cannot possibly hope to memorize because they happen so rarely. But, from a board room perspective, the focus is much stronger on the efficiency/correctness gains for the happy-path consumer product stacks.
I'd say it's a dragon of a space. Borderline cursed. It took us half a decade just to get core interfaces working well enough and that is only like 20% of the puzzle. Documentation, regulations, back office processes, etc are way more important and involve super nasty conversations with people who might sense that you are trying to replace them.
Did your seat assignment abruptly change and the gate agent is evasive or outright refuses to say why? Nod knowingly. Say "oh, right, must be a FAM." Ask for what you want: "I'll just take the next flight for free", "I understand if there are upgrades available on my return", or just nod and wink. The GA won't be able to say whether or not you guessed right and it's much funnier that way.
Which is stupid. All of this is because FinCEN has banks by the balls
What is meant by side channels here? Is it writing "a paper letter to the VP of Retail Banking", as mentioned elsewhere in the article? That doesn't seem "intentionally designed", so the author must be referring to something else, but I don't have the imagination to guess it
That's the kind of thing done by people who the bank really doesn't want to offend. The bank decided it wants that to work for them. Therefore the bank created a way of making sure it works.
That it is not documented or advertised is a feature.
Something that would entail hours of phone support thru official channels cut down to 15 minutes. Once you discover this there's no going back and it all depends on who you ask, and how you ask.
For banks and other regulated industries, if something is a sufficient clusterfuck of incompetence and getting-the-runaround, filing a complaint at some supervisory authority also works. That generally gets the attention of the "troubleshooting" team mentioned, which is usually all it takes. The supervisory authorities know this, and most complaints likely get resolved this way (getting it in front of someone with some level of competence and authority).
I think the tiering structure is reasonable (some of my requests simply need a Tier 1 person to press a button that they have and I don't), and I've seen cases get escalated appropriately, but when the escalation fails/doesn't happen quickly it's incredibly infuriating.
Other side channels can be (real examples):
- legal department (note: this can be a one-way street and can make the company only talk to you through a lawyer, but if e.g. you have a complaint with a company that would result in a small claims court judge shake their head over the company's behavior, and are willing to take it to small claims court, this can be really effective). To reach them and get their attention, filing a small claims court case can be effective!
- Really bad feedback (0/10 on every category, including the "are you satisfied with the person on the other end", not just the company) on a customer satisfaction survey
- Social media (the common way to escalate "beyond the abilities of normal support channels" issues with tech companies). There are teams specifically for tracking and escalating social media feedback, but that's again a tiered system. Bigger shitstorm = higher tier.
For what it's worth, there are a staggering number of people doing political advocacy who follow these sorts of things. The main problem is, unless you are inside that system, there is no (scalable) way to know which relatively obscure parts are about to do something that you want to comment on. And, as patio11 wrote out, it's a massive system that has been layered on top of layers.
Part of the reason why spend "time fulminating about greedy capitalists" is because those "greedy capitalists" are the ones inside the system. Hell, a good amount of time, advocates are having to spend time pushing back against "greedy capitalists" because the status quo is already known and understood, but a change would cost money even if it is beneficial so the change must be opposed.
What advocacy could really use is more people who have this deep understanding and can write out lengthy articles like this explaining all of the ins-and-outs to come along with the advocates as a guide. The problem is, the economic and cultural incentives don't work like that.
As the passenger moves through the system, each different subset of attributes is attached only to the system in which it lives, and cross-correlating a passenger across systems is done in numerous ad-hoc ways.
The customer service folks have a lot of tribal knowledge, and if you happen to get an experienced one, they can really smooth the way. During the pandemic, though, a lot of people left the industry, and a lot of knowledge just walked out the door.
Anyway, what I am saying is that is well worth the read; especially the bit about constant firefighting.
I've been in banking longer than he was, I think (15 years in my case) and a lot of what he says isn't true for many institutions out there. The overall view is somewhat accurate - there are such issues in a Bank, usually stemming from how big they are, but details are not necessary what is being described.
Take the article with a grain of salt.
Transferring large sums between the US and my Dutch account? Wise.com makes this much simpler, but its not easy. I can use ACH transactions, but that is limited to 20k at a time. Wire transfers provide a way, but my US bank limits daily transfers initiated online to a pretty small amount (good to combat fraud, inconvenient if buying a house). I can travel to the US and initiate the transfer in person, but you may recall that travel was difficult in 2020.
I had to send a paper form, with proof of identity provided by a Dutch notary (more like a paralegal than a US notary, to a central office for the bank in the US. Maybe this is ok? It’s not like I need to do it very often.
I do hope FedNow makes the usual European experience more common in the US.
Banking is in a deep, existential crisis for decades now and the march of digitization only increases the pressure to find a way forward.
In response techno-solutionists imagine all sorts of replacements, whether it is "fintech", or "banking-as-a-service" or "crypto" but all are hopelessly shallow and incomplete, almost insultingly crude.
What is entirely missing from these neobanking movements is any straight definition of what is the purpose of banking and bankers. What is their irreducible value proposition that cannot be delegated to machines and algorithms. What is their role in society. Are they allies or enemies of surveillance capitalism? Are their users clients or products? Can there be an honest relation with the sovereign monetary system and the lender of last resort or is private banking a scheme to privatize profits and socialize losses? Last but not least, what role, if any, should they play towards environmental sustainability.
The questions and challenges are pilling up and there are no breakthroughs worth mentioning. In a parallel universe we might have something like BN (banking news), where all sorts of individuals, teams small or large, would pimp their blogs, radical ideas, open source solutions or fancy software products, but above all a positive, forward looking vision for a crucial sector.
To borrow money from you, paying you a low interest rate, but allowing you to withdraw it at a drop of the hat, while lending money to someone else, at high interest rates, but on a fixed, multi-year repayment schedule.
Borrow short, lend long. It's socially useful, and if the bank does it well, it stands to make a lot of money.
Separating the issue of private money from providing commercial credit risk insurance (ala CDS) should be possible.
I'm not saying narrow banks are worthwhile, but it's utterly insane that it's illegal for a bank to simply hold $100 bills in a bank vault on your behalf. It's utterly insane that banks are not just permitted, but legally required to lend out your money. And there's a minimum amount, too, because a bank that lends out $1 of each customer's money won't get a license.
There are at least three distinct elements and largely unrelated to core banking: payments infrastructure / gatekeeping the private/public monetary system, managing interest rate risk (which is what you describe) and managing credit risk.
Add to that countless "non-core" intermediation activities which nevertheless, depending on the type of bank can be major revenue sources.
Maximazing social utility is indeed the key question but how to do it in a sustainable and future proof way is hardly ever seriously asked.
A bit like the relationship between Gmail and personal data, really.
It was a culture shock because I'm Russian and banks don't play as important of a role in our society because of the Soviet past. Yes, most of our population has a bank account these days. Yes, most people are paid by transfers to that account. But — our entire banking system was built from scratch in the 90s. Banks had to sell the whole idea of banking to people to begin with. So if you have an issue and you go to a branch to get it sorted, you do get it sorted on the spot by a branch employee. It probably also helps that many Russians "don't trust banks" so they'd go to an ATM on their payday and withdraw their entire salary and use cash for all their transactions. We've also never had checks, we skipped that entirely. We also have this nifty СБП system that allows you to instantly make a transfer from any bank to any other bank using just the recipient's phone number. Very useful for things like splitting bills. I was shocked to find out that most other countries don't have anything like this and even sending someone money within one bank is quite a process.
Other countries in EU have similar systems where you can use phone number instead of IBAN. It is convenient for small sums.
Also you can do free SEPA wire transfer in any EU currency to any account in EU or abroad. Big difference to how expensive is to move money from pre-war Russia or USA.
The only time I've seen checks used it was for a company account. That is in contrast with some countries where checks are still in wide use by regular people for large personal expenses like rent.
About EU, yes, I heard about this. Also India has a similar system.
As someone living in Iowa, I can confirm this is true and also less effective. I bank at Chase because a straight forward "no" or clear process is so much more efficient and effective than a "nice person trying to help". People in Iowa hate that truth, but waste so much time listening and passing people around to solve a problem that should be resolved with a clear answer.
I totally dispute that and there's a contradiction in there. If many of them will have done nothing wrong, then the drafters were plain stupid.
Typically senile, dumb, stupid, out-of-touch people.
There's nothing for the people in there and it wasn't the result of a democratic process.
It is also a complete and utter failure, costing $180bn worldwide for a mere $12bn frozen (not even seized but temporarily frozen, some being actually legit money that'll eventually be unfrozen).
In other words: it's yet another pointless law that is not having the intended effect and that is costing business and taxpayers money and time while making people feel they live in a dystopian madness.
And there's more drugs than ever sold both in, say, the EU and the US. And there's still child pornography. And there's still 3% to 5% of the world's GDP that is tied to criminal activities.
"The more numerous the laws, the more corrupt the state" (Tacitus thousands of years ago)
Selection effect (the question is how many illegal activities it prevents in the first place)
> And there's more drugs than ever sold both in, say, the EU and the US.
Base rate effect (population and disposable income are going up, and who does market research on drug sales anyway?)
I too have/had a mortgage at FR and I now see it in my existing Chase account (maybe the balance is even correct, pretty hard for me to know), but I have no idea whether they are going to still take the payment out of my FR checking account, despite their official transition page saying "all automatic payments will be transferred as well."
I guess I can't take the money out of my FR account until I know.
I was also caught totally off-guard when I logged into FRB and it informed me my mortgage had been closed. If I didn't have a Chase credit card (and saw my mortgage there when I went to pay the credit card) I'd probably still be baffled.
One thing I found out about mortgage auto-payments at FRB was that they wouldn't take the money out unless there was enough in the account within the first 6 days of the month. They would automatically check every day, and if the balance was high enough, they would take it out. On the 7th day I guess they would send you an overdue notice (and maybe keep checking? no idea). They could only do this because they owned both accounts.
Edit: Okay, TMI but this is just so... interactive right now.
I looked up the transfer balance in my FRB account, and the account balance at Chase was $6k higher. So I called Chase Mortgage.
The wait was only about 3m (after the touch-tone gauntlet), and I talked to a very nice dude who welcomed me to Chase... and then promptly told me he'd have to transfer me because I am a "Premium Customer" coming from FRB. I've been on hold the last 15m. Premium I guess means "wait more".
> Banks aggressively partition staff based on job duties and levels within those duties.
Why?
"We can generate more throughput in the system as a whole by negatively incentivizing each component to work itself to death."
See Goldratt, Eli.
You might be imagining two banks coordinating together, now scrap that and imagine ALL banks coordinating, because you don't know which two are going to merge.
Banks have been born at different times (think centuries - or even millenia). So they'd all have to move in lockstep from clay tablets to papyrus to printing press to typewriter before they even decide whether or not they want to bet on computers as a way forward.
To some degree banks already have 'a shared operating system' in the form of clearing houses and central banks. I don't know enough about that stuff. But it's the reason why bank transfers have mostly taken days to complete, rather than seconds, in the past few decades.
Come to think of it, there's a huge incentive not to stay in lockstep with all the other banks if you can offer customers instantaneous transfers when other banks make you wait for days.
This is also why they're often so very expensive. That $25 or whatever isn't being spent on the cost of updating the ledger. It's the cost the bank incurs because of the need to sell assets (loans) before they intended to.
Specifically, the reason that payments are still tied to the nightly cycle is because orders submitted to the central bank aren't executed immediately. At night they suspend submission of new orders and do something called netout or payment compression on the transfer graph, the goal of which is to reduce the amount of money banks need to hold at the central bank. Every payment no matter how small can contribute to the netout, reducing liquidity needs at the CB.
Additionally, there are, like, three big players in the space (at our level, at least). When you’re choosing a core, you’re probably going to be more concerned by questions such as “what percentage of our total revenue will go to this one application” and “what features can we use to save us tons of work and money” and “will this make us more money”. You probably won’t be too concerned with whether converting off the core fifteen years down the line is super difficult or “just” pretty difficult. If you do ask, all three will give you the same answer anyways.
My very very naive take is that they will have had to solve similar problems over time and will have practices and systems that work analogously. I would bet they will probably not use identical software packages or data structures and will have had little reason to structure their internal operations around someone else's standards. This is especially likely to be true of standards that came along well after the companies already solved the problems the standards are aimed at.
It is even worse than "regular" bank because you can't go to the branch or call the support number. You can get help via chatbot from the application and I doubt you can use it without active account.
This gave me a chuckle. :)
This is the antidote to many a HN commenter.
Open multiple accounts and when one starts acting up change it out for another. Always have several bank accounts at the ready.
Every transaction you make has risk, counter party risk extends to your financial institution as well.
You should be running drills every quarter and randomly switching up your bank. Don’t be a victim when you have engineering solutions to these problems!
If you have money in an account at a bank for business operations, keep that in a completely separate bank and legal entity than the one with a risky transaction profile. Use an intermediary bank to receive deposits from the likely to close bank account that transfers money out immediately to your operational account, and make sure it’s at a competitor. Banks don’t share info and you can take advantage of slow processes and communication delays to give enough time to fix problems with a flaky bank before they impact your business. Think of it like a firewall for your business.
That is messed up. You ask about a SAR or indicate you know about them in general, you get a SAR slapped on you, and they close your account. You're one of hundreds of thousands, why bother handling a SAR-ed user when they can just move on without you.
Are individuals allowed to have a public forum to discuss and share notes of what they did in their account to learn and prevent this from happening in the future? It seems in a lot of cases it's using these payment systems like Zelle or have anything associated with phrases resembling black-listed countries or organization.
However such a forum is going to be of particular interest for would-be money launderers. And therefore you should expect it to be monitored by people connected to the financial system. With the result being that active participation in such a forum may itself become grounds for a SAR to be slapped on you.
A SAR that, of course, you will never be informed of. Because, as patio11 documents, that is the law.
The government actually wouldn’t be able to make these regulations for itself, and the only way it manages to make AML laws work is with a complete governance anti-pattern. Where they simply tell the banks that if they unknowingly allow any “money laundering”, then they will be punished, rather than actually creating some regulations for them to follow. So the institutions just create these kafkaesque nightmares themselves, because they don’t really care about who gets screwed over by them.
The worse part is that money laundering is trivially easy for anybody who wants to do it, it just costs money to do the compliance properly. The only people who get thwarted by these laws are immigrants who do a lot of remittance, and law-abiding wealthy people who naively think they’re entitled to possess their own money. Two groups that society generally doesn’t care at all about protecting.
I personally make a lot of money off the AML compliance industry, so I’m not really complaining for my own sake. But these laws are the intended outcome of “anti-terrorism” and “anti-tax-evasion” policies.
They should be fine as long as they show receipts.
Do you have an example of what you mean by this? Like they will say "well you don't have your old paper pay stubs from the 1990s when you were paying the mortgage on your house so we will confiscate your house, go die alone in the gutter"? Because I find that hard to believe. Most people with wealth have an obvious reason for that wealth which is documented in the formal bureaucratic system.
Yes this is basically how it works. The only contrived thing about my example is that we’re talking about one house a person inherited, rather than millions of dollars in assets.
Here’s a well documented example of this happening in real life
https://www.latimes.com/california/story/2022-09-30/judge-ba...
> A federal judge ruled Friday that the FBI’s seizure of tens of millions of dollars in cash and valuables from 700 safe-deposit boxes in Beverly Hills did not violate anyone’s constitutional rights.
> The decision by U.S. District Judge R. Gary Klausner endorsed law-enforcement tactics that tested the limits of how aggressive federal agents can be in seizing money and property in the absence of any evidence that the owner committed a crime.
> The ruling did not address some of the most controversial aspects of the raid, such as the FBI’s attempt to confiscate assets from box holders on the presumption they were criminals, even in cases where agents had no evidence to validate their suspicions.
Of course, nobody cares, because those people are rich, so they probably didn’t deserve that money anyway…
I am not very impressed by implications that of the truly downtrodden and powerless people in the United States, the 'rich' are anywhere near the front of that line.
“The government seized the nests of safety deposit boxes because there was overwhelming evidence that [the deposit box storage location] was a criminal business that conspired with its criminal clients to distribute drugs, launder money, and structure transactions to avoid currency reporting requirements, among other offenses,” they said in papers filed in Los Angeles federal court.
https://www.latimes.com/california/story/2021-04-02/fbi-beve...
You can request your items back here: https://forms.fbi.gov/u-s-private-vaults-claim-form
None of this is impossible. None of this is unknowable. This all happens everyday.
Do buyers here not do a title exam?
But they were produced through the democratic process: we have told our elected representatives that we want them to Do Something about things like organized crime and international terrorism, and these laws are part of the Something That Was Done. The laws will not change unless and until we the people change the incentives we give our elected representatives.
It could also be argued that such laws and policies have mainly been enacted by states in order to eliminate threats to their authority, legitimacy, or continued existence, through financial control.
Which may or may not be the case. Just pointing out that states, even liberal democracies, may not always be all about expressing the will of their constituents.
[1]: https://www.cambridge.org/core/journals/perspectives-on-poli...
[2]: https://www.vox.com/2016/5/9/11502464/gilens-page-oligarchy-...
If we the people wanted something different, we would be voting differently. The fact that we continue to vote for the same incumbents means they are doing what we want.
Yes, that's true. (And the Senate is no different.) What does it mean?
I think it means that people do not realize the actual problem. They don't see the two facts you cite as at odds with each other or connected to each other at all. But they are. The reason why Congress can have such a low approval rating while incumbency reelection rates remain high are that people think it's all those other members of Congress who are the problem--if only everyone would listen to their members of Congress, all that stuff would get fixed. They don't realize that, if you send someone to Congress to fix something, and it doesn't get fixed, you need to send someone else. You can't keep allowing the incumbents to hide behind "it's not me, it's all those others" forever.
> Yes, that's true. (And the Senate is no different.) What does it mean?
Red voters tend to live in red seats & states, blue voters tend to live in blue seats and states.
This is a tautology. It doesn't change anything I said.
I still think it's the most intuitive way to describe the first-order explanation for why people are happy with their specific representatives, but not Congress as a whole.
See gerrymandering. See abstention rates and voter apathy.
Politics, like any system, can be gamed. Considering the incentives and interests at play, it is no surprise that it is. Taking into account how long these systems or similar have been in place, it shouldn’t be surprising that efficient tactics and strategies have been devised and refined over time.
Also considering how uneducated most of us are when it comes to politics, it is no surprise that most of us fall continuously fall for age old tactics and strategies.
Regarding "we the people", I personally do not come from nor live in the US. In the country I come from, people chose to do exactly what you suggest and vote for someone new. They eschewed both traditional parties, did not fall into the extremes' traps, and elected… the underdog!
Or so they thought. It seems they hate him now. He did get reelected, but by less than 40% of the people who could vote if they cared to or believed it would change anything.
Nothing new under the sun, really. I’m pretty sure we’d find the same patterns at play in Athen’s Boule and Ancient Rome.
But hey, "with every mistake we must surely be learning".
In case it wasn’t clear, I have personally entirely given up on both my fellow citizens and my home country’s (a liberal democracy as well) politics.
Sure there is. "Want them to do" means the constituents decide their votes based on Something Being Done. The fact that we the people continue to vote in our incumbent representatives at rates over 90 percent is a direct measure of the extent to which those representatives are doing what we want them to do.
This is an artifact of the districting system. A given district wants the local military base to stay open, or tax credits for the local industry. Their representative gets them that, so they get reelected. To get them that they screw over the general public in a thousand ways -- mostly by trading other representatives for the things that aren't in the public interest but their districts want -- but none of them are big enough for the people in the district to change their vote, and most of them couldn't have been prevented by a single representative anyway. So the bums fail to get voted out.
Which in no way contradicts what I said. The fact that what the people want (or at least a voting majority of us) actually screws over the general public does not mean the people don't want it. It just means that what the people want is not actually good for all of us in the long run. Welcome to reality.
Okay, it was a bad example because those kinds of hardliners do want all the bad things to happen. People given a choice between "close the military base and lose your jobs" and "keep your jobs, but we drop more bombs on brown people" don't necessarily want to drop more bombs on brown people, but they do want to keep their jobs.
What are you talking about? No voter is faced with that choice.
> those kinds of hardliners do want all the bad things to happen
Who are these "hardliners" you speak of?
> People given a choice between "close the military base and lose your jobs" and "keep your jobs, but we drop more bombs on brown people"
No voter is faced with that choice either. Closing the military base in a particular district doesn't mean the military downsizes. It just means the base gets built in some other district whose representatives were better at getting pork for their constituents.
None of these things have anything to do with the basic problem I described.
There are existing laws that couldn't command majority support in any district much less a majority of them but remain on the books because the representatives who support them continue to be reeelected for independent reasons.
On most topics, there is NO candidate who is for doing things outside of the current Overton window. If, for example, you don't like our AML laws, you probably don't have a viable candidate on the ballot who wants to change our AML laws. Therefore your vote can't show your support for changing AML laws.
Sure there is.
They aren't likely to be a major party candidate, but then, that's pretty much true by the definition of the Overton window -- if it is supported enough to be a tolerable position for a major party candidate that isn't an extreme outlier within the party, then it is not outside the range of acceptability than the Overton Window refers to.
(Of course, the major point of the Overton Window is that, in a system with elected lawmakers, laws largely aren't set by lawmakers preferences, but by forces, largely external to lawmakers -- including both concentrated interest groups and grassroots activists -- that shift the Overton Window and set the bounds for what it is practical for lawmakers to support.)
If we are convinced, then they are doing what we want them to do--because they convinced us that there is no point in wanting anything else.
> On most topics, there is NO candidate who is for doing things outside of the current Overton window.
Yes, but what is the Overton window? It's the range of policies that most people will accept. So by definition only policies within the Overton window can possibly be what the people (or at least a majority of us) want.
https://content.11fs.com/article/aml-is-the-worlds-most-inef...
(No, I'm not suggesting that I have an answer to that question. Just that you're measuring by the wrong measuring stick.)
> It recovers 100x less than its compliance cost.
The proportion of crime that it catches is of interest to criminals and is what will have the deterrence effect, but whether it catches 10% or 90% is difficult to know as a layperson.
The other major problem here is that what you're deterring isn't the underlying crime that generates the money but rather the activity that triggers AML scrutiny. So you have little hope of deterring the underlying crime, all you do is cause people to organize their finances in a different way. Which is hardly worth imposing significant costs on millions of innocent people.
I'm sure you'll agree that this doesn't actually relate in any way to the specific number discussed above, aside from sharing the adjective "effective" used as a descriptor.
The cost of compliance to legitimate parties does not have any obvious mechanism to directly affect the deterrence effect.
Ah the crypto boogeyman! That argument is ridiculous. The CIA factbook estimates that the proportion of the GDP linked to crime worldwide is 3% to 5%: that's 3 to 5 TRILLION USD directly linked to criminal activities.
Cryptocurrencies do not even register here. It's not even a drop in the bucket.
Moreover public ledgers are what law enforcement and IRS' employeees' wet dreams are made of.
First, there are widely known techniques to beat AML. Criminals use them. Using them imposes costs. So you can reduce the profitability of crime, and therefore its frequency, without catching much crime directly.
Secondly, one of the goals of AML regulations is to make it easy to construct a money laundering case against a criminal caught another way. This is kind of like putting Al Capone in jail for tax evasion. Tax evasion isn't why you want him in jail, it is just the thing you can convict him of. Prosecutors see value in these easy convictions.
Are they worthwhile? That's above my paygrade. Certainly patio11 makes a case that they might not be. But both of the things that I just mentioned show that the rules are valued for reasons other than routinely catching a lot of crime.
This is only reasonable if the same measures don't also impose costs on innocent people, which is not the case.
And the value of doing this operates inversely with value: The crime you deter this way is the lowest value crime which is the easiest to deter through some other means, but the innocent people you most harm are the ones already at the margin who you don't want to deter/bankrupt, but you do.
Which damages the most competitive markets with businesses that were operating with the thinnest margins and forces them to consolidate into something that can absorb the compliance cost. The cost of inducing that kind of market consolidation is enormous -- as we've seen time and again.
> Secondly, one of the goals of AML regulations is to make it easy to construct a money laundering case against a criminal caught another way. This is kind of like putting Al Capone in jail for tax evasion. Tax evasion isn't why you want him in jail, it is just the thing you can convict him of. Prosecutors see value in these easy convictions.
Undoubtedly the lobby in favor of AML laws is lazy prosecutors who can't be bothered to prove their case honestly and would rather have a vague law that causes common behavior to be a chargeable violation. But that purposeful subversion of the rule of law isn't a legitimate reason even if it wasn't imposing major costs on innocent people.
These groups have no issue with the few percent cost of added transaction friction.
But it really costs people running low-margin businesses or unsophisticated honest people just trying to move overseas, remit funds to family or buy a home overseas.
And the knock-on effects of the bypasses becoming things like “buy a front-business and care less about the legitimate competitors that can’t compete with someone unworried about profit” or “buy a house and let it sit empty”.
If you could actually prove that, I think you'd become quite famous in sociological/economic science.
So no, I think you're making an unwarranted assumption: "How much you can catch" is not necessarily proportional to "How many would have tried except for the fear of being caught."
In particular, actual/would-be violators have a distribution of different motivations and tolerances for risk.
You might deter the large majority of crime if the chance of getting caught is one in three, because the cost of getting caught is also high. But if the chance of getting caught is only 0.2%, from a psychological perspective people are much more likely to see that and discount the possibility of it happening at all, and mathematically it would be unreasonable to impose a penalty high enough to compensate for such an abysmal rate of effectiveness. So ineffective rules aren't just useless, they're disproportionately useless.
AML also serves to buttress public support in the financial system because the public interest is being served, and at least recently, without AML the housing crisis would be significantly worse.
"Let the criminals put their cash wherever they want, because it's too expensive to stop them" Isn't exactly the rallying cry you think it is
You don't, though.
Most of Canada’s is like that. Basically governments can suspend all of your “fundamental freedoms” for 5 year periods, renewed as often as they like.
The EU is just more upfront about its limitations. The EU says: Free speech is good, but some of it is dangerous so you can't have all of it, sorry. The US simply says: We have free speech. Then it arrests you for speaking anyway.
Find something you can't say in the US, and ask a (sufficiently educated) American about it. They'll tell you it's not really free speech or it doesn't count or some nonsense like that, and that America has free speech. A (sufficiently educated) European will tell you it's one of the exceptions.
Oh, it absolutely does. It's really the only country that I would say absolutely does.
No other country has free speech enshrined in it's constitution to the same extent, nor such a strong history of caselaw defending it. The US has a lot of problems, but as a people they are almost as zealous in defending free speech as they are in defending the 2nd amendment. In most other countries other concerns might take priority, but often and only in the US free speech will be the first consideration.
> Find something you can't say in the US
Anything can be said.
Please, go to your local town square and hand out flyers about your plot to assassinate the President. Report back with your results.
Oh, and I can predict your reply. You will tell me some excuse for why that isn't really speech, or it is speech but it shouldn't be free even in countries that have 100% free speech (which is a completely absurd argument, by the way - I must recommend you try the "that isn't speech" approach as at least that one isn't not an immediate formal contradiction).
There's lots of crazy people and we don't keep them in prisons anymore.
Ah, lol. I thought you might try something like this.
Yes, there are some exceptions, e.g. yelling fire in a crowded theater, but they generally don't count. They are not restrictions on anything you actually want to say or communicate, they are restrictions on causing a riot or disturbance.
The difference is in the US you can actually say anything you want to say to communicate any opinion or information you want. That isn't true in most other first world countries.
Just look at people getting arrested for protesting Charles' coronation in the UK, people all over Australia, NZ, Europe etc being arrested in pro Palestine (NOT pro Hamas) protests, people being arrested or facing legal issues for giving an opinion on something COVID related in countries other than the US..etc etc etc.
> Oh, and I can predict your reply.
Well, you made a disingenuous argument and were well aware that you did, so that isn't entirely surprising. However, I clarified the claim making that tired old fallacious response entirely irrelevant.
You are not free to earnestly threaten president or call others to do so. You are not free to share speech that’s been deemed classified. You are not free to conspire with foreign enemies. etc.
While the US does protect many forms of forms of political speech that are deemed impotent or that advocate radical position within the rubric of its institutions, it does have roughly much the same ultimate limitations as every other modern liberal democracy (and many modern non-democracies).
It’s not actually very much of an outlier at all.
Because that's not speech, as in an opinion. It's a call to action. But you can speak all day long about how the president is useless and should be replaced. People in the UK couldn't even protest the coronation of Charles without facing arrest.
> it does have roughly much the same ultimate limitations as every other modern liberal democracy (and many modern non-democracies).
Simply not true. People get arrested for speech in other first world countries that would not happen in the US.
> It’s not actually very much of an outlier at all.
It very much is.
If I'm not free to tell someone to punch you in the face, then I don't have absolute free speech.
Yes, technically, but come on now. You're being disingenuous.
Let's forgo the semantic bullshit which is a pretty shoddy attempt at making a point to begin with.
Instead of saying 'freedom of speech', since you want to be so technical, we can say 'freedom to express any opinion'. The USA has significantly more freedom for people to 'express any opinion' than other first world countries.
> I don't know how much simpler I can make it.
You're not making anything 'simple', you're making a disingenuous point to try and support an even more, forgive me, asinine point that isn't really correct except in a meaningless semantic way. You're ignoring the spirit of what is being discussed and acting like you've refuted a claim; you haven't even come close.
Why don't you actually try and address the claim made instead of playing silly semantic games in lieu of an argument?
No one reasonable disagrees that you shouldn't be able to yell fire in a crowded theater. There have never been people advocating for that when they argue for free speech.
Pointing out there is a restriction on causing riots or disturbances to argue that there is not truly free speech is rather meaningless. It's a 'victory' only in the most technical sense, and not one worth recognizing considering how irrelevant it is to the actual discussion, which relates to "freedom to express any opinion".
Just to be clear, the claim is that the US has significantly more freedom to "express any opinion" than any other first world country does. In this context, "freedom to express any opinion" is generally referred to as "freedom of speech".
Currently, almost everybody who say this, want something else, and this is just a tool to achieve that other thing. A proven harmful tool.
There is free speech in the USA.
That is quite literally what it means. Everything else is a retcon. (It still doesn't mean freedom of social consequences though)
You said it yourself: uncontrolled free speech is harmful. That means there should be mostly free speech, but not completely free speech.
>> That is quite literally what it means.
From a platonic ideal, true. But in reality platonic ideals do not exist. Does pure capitalism exist anywhere? No, because without some regulatory scheme it would devolve quickly into plutocracy, planned economy or a regulated capitalist economy.
And currently, your words against basically the whole relevant literature, laws, and basically almost all of humanity. Especially those which describe how people use expressions meaning a scale as an absolutist term, which happens continuously, like in your case too.
Legally in the US, it has never meant this. No freedom, even Constitutionally enumerated ones, is absolute. It logically cannot be different than this because every freedom we have can be used in a way that infringes on another person's freedom. The path to maximal liberty for everyone always requires some limits on individual liberty.
The exceptions are as old as the idea itself. The retcon is thinking otherwise.
But it does seem like the world lacks a manual on How Not To Get In Trouble With Your Bank. “Structuring” in particular is something someone might innocently do just because they like round numbers.
Don't do everything online. Do the big or unusual stuff person-to-person. It doesn't even have to be an in-person visit. Give them a call.
I wouldn't ever ask whether or not I'll get an SAR, though. That sort of question is pointless. Instead, I just treat my bank as a core partner to my business and include them in my plans. The side-effect is that nothing I do looks suspicious to them.
IME they really don’t like when you work around their eg 50k/day ACH transfer limit by initiating 50k ACH transfers on 4 consecutive days to move an account of 200k. But they don’t tell you what they actually want you to do if you want to move 200k - and for obvious reasons they probably don’t want to make these transfers fully frictionless. They just assume you’ll know to show up at a branch in person or get on a phone to ask about it and treat you like a criminal if you don’t.
My last bank had limits like 20k/day and 50k/week, so it seems like yours could have 50k/day and 60k/week if they "really don't like" you using it like this.
And yes, this will cost more and take more time than the spreading-it-out method.
maybe if you're moving 50k/week they'll try and get you on a business account, but at that point you're already not using the account for the purposed you claimed when you opened the account.
If you do what I did, you usually get a temporary hold on your account and some very skeptical bank employee calling you to grill you on what you’re doing.
On one hand I get it. For every story like mine, where this is just a temporary frustrating inconvenience, there’s probably a story where grandma lost her life savings after talking to the nice man from Microsoft on the phone. But also they don’t make it clear at all what you are supposed to do as non-criminal to work around their restrictions, which is just bad for customers.
Yes, it's hilarious.
One of my banks requires me to do the transaction over the phone if it's above a certain limit.
At which point, you talk to someone in a call center, and they proceed to ask you exactly the same information which you needed to introduce in their web interface to make the wire transfer yourself, and nothing else.
This includes giving your web interface credentials over the phone, which could be heard by someone inadvertently or even phished if you happened to have misdialed accidentally. Or stolen by the call center employee.
It's also great fun to have to spell out 20+ account digits, the names of the other people/companies, phone numbers and email addresses to receive confirmations and even a description of the transaction (fortunately I don't always buy sex toys).
Gosh, how I love to spell out all this information, digit by digit, letter by letter, over a phone call! But since it's for my protection it makes it OK, right? Right? Hello?
It wasn’t ever really resolved in a satisfactory way but it got to the point where I was so frustrated and tired that I said “fine, we can settle on $200” because it wasn’t really worth pursuing further (based on my hourly rate and how much wasted time I’d already sunk into it)
Read this case-study from the UK. https://www.financial-ombudsman.org.uk/decisions-case-studie...
"We thought the spending on Marta’s account was very unusual for her and – after the first few payments – the pattern of transfers from her account should have caused the bank some concern meaning that it ought to have intervened. We thought that if the bank had asked Marta about the transactions she would have told it what she was doing."
Consider the implications of this.
It gets worse, "In deciding fair compensation, we also considered if would be fair for Marta to bear any additional responsibility for what happened. However, as we thought the trading platform and correspondence with the fraudsters was very convincing, we decided against that on the facts of this case. So we asked the bank to refund all the transactions which took place after the point we thought it should have intervened."
This regulator does not respect the concept of personal responsibility.
These problems are also downstream of systematic public policy failure. We have had telephones for about a century. Yet in 2023, it is still routine for pensioners to receive calls from organised fraudsters. There is no reliable way to trace the source of these calls, to block ranges of numbers, to prevent scam call centres, to issue pensioner-friendly forms of telephone with higher safeguards. These problems are not technically difficult to solve. All could be fixed if the telcos behaved responsibly. That work should have been done thirty or more years ago.
Since that work was not done, there is now a fraud crisis. In response, regulators have forced controls to the last point possible, which is with the banks. Huge inefficiencies follow.
> The CRM Code did not cover this type of transaction, because the payments Marta made from her bank account were sent to an account held in her own name with the crypto exchange. However, outside of the CRM Code, banks have other fraud prevention obligations – including to look out for unusual transactions.
In other words although there's a document saying what a bank should try to do, that is actually meaningless because the regulator believes banks should somehow stop all fraud even in cases where people are literally giving random strangers total control over their bank account, deliberately, because they can't be bothered understanding how to operate their own financial accounts.
The cherry on top:
> If you invest in a firm which isn’t authorised by the FCA, you risk losing your money, without any protection.
Apparently not, because if some civil servant thinks you are pitiable and the scam was convincing, they'll force the bank (i.e. other customers) to make you whole again anyway.
This situation creates a market for new fraud-detection products, if anything just so that the banks can tell the regulator that they did their due diligence. Of course it depends on how common situations like Marta's are, and how expensive they are for the banks.
It's worth bearing in mind that most financially motivated criminals are after easy marks. If you're too hard or expensive to hit, they'll find another target. If you're seeing like a bank, that's a victory and the protocols are doing their job by reducing fraud.
$20-ish to move 200k safely is nothing. If you are doing it internationally, it's typically tiny compared to the FX cost.
Point is, wires are cheap for what they do. They aren't your only option, but all options have tradeoffs.
As I said, there is a range of cost/risk/PITA options available. This is niche enough I don't think it's particularly worrying the banks don't support it easier.
They like to keep the impression that account freezes are discretionary not automatic.
I suspect that's the norm that banks are expecting.
I'm gonna sound like a shill, but 99% of the problems people are writing about in this thread would be solved by opening an account at schwab. unless you routinely deposit/withdraw large amounts of cash, there's no reason to waste time with other banks.
Either way, the bank has trained the customer to work around limits. They can't have it both ways.
Surely, just picking up the phone and speaking to them is faster and easier than engaging in structural transactions like that.
And also no it isn’t faster to pick up the phone, even if I don’t get out on hold at all. An ACH transfer takes seconds, it’s like writing a digital check. Doing it 4 times takes very little time.
I find it's much easier to engage in a 15 minute phone call than to do multiple transactions over a number of days. You may find it different, of course.
Hell, in Spain you can't even legally pay anything in cash if it costs more than 1,000 EUR. In Greece, the limit is 500 EUR.
They will tell you to use a wire transfer.
Nothing nefarious and I'm not even sure if I won or lost out of this - but it was interesting to catch.
Why would you do this?
I, too, am dying to know why you do this. I assume that you didn't intend it to be punitive, but that's what it looks like to me.
That means shady restaurant could change your tip the next day if they wanted to pull a fast one on you.
In other words, it’s not possible to get an immediate notification of the total amount charged including tip until 1-2 days after the meal.
(Don’t ask me why the system works this way, makes no sense to me)
- every restaurant PoS has to be updated to handle this use case;
- you have to wait for your server to make a second visit to your table before you can sign your tab and leave;
- every server has to spend extra time dealing with every table's tab upfront, rather than settling after close when no customers are inconvenienced by the time that takes;
- and all this cost and friction to reduce the incidence of a kind of low-value card-present fraud which is trivial for the customer to have reversed, and quite rare in all respects save the purely anecdotal.
If you're going to worry about any kind of payment card chicanery at a restaurant, the thing worth looking out for is skimming, not this.
In fact, the card terminals themselved ask how much you want to tip when you pay and then the card payment is taken on the total. I don't think it would be possible to proceed another way with all the safety procedures in place nowadays.
Otherwise, people used to leave cash on the table when they left even if they had paid by card (meal only) and they wanted to tip.
I have the sense that tipping is much more customary in the US than in Europe, which may also make a difference. Certainly there is a significant semiosis around the concept here, which would also have to change in response to a change in the shape of the practice; I don't know exactly how much that contributes to things staying as they are, but I doubt it's of no import.
Oh, I see. The US are so 1980s ;)
In Europe all card payments are chip-and-pin so they have to hand the card machine to you for you to type your pin.
EMV is pretty common here these days, but evidently optional for restaurants; I suspect there's a carveout in the relevant association rules.
Interesting; I rarely carry a card and just pay with my phone. I've never been to the US, but it certainly wasn't an issue when I visited Canada. I should probably remember to take my card if I visit a restaurant in the US.
That said, I assume even restaurants whose POS equipment is well hidden would be generally able to handle folks who prefer the single point of failure.
It's 69.
There's no shortage of people who found their accounts closed for "fraud" who did nothing wrong, but instead were victimized by the algo and the general incompetence of banking tech.
Personal financial experts often tell people to carry a credit card from a bank that isn't yours or have a checking account at a separate bank because this is so common.
Lastly, the people moving money to blacklisted places aren't opening Bank of America checking accounts. There's entire cottage industries and crypto and shady international banks, etc ready to cater to them. They're not getting banned because they use services that don't ban them for moving money around like this. But everyday working class people get banned randomly for moving gifts or tuition money around, etc.
My understanding of money laundering, and the laws designed to catch it, wasn’t that it’s used to get money into illegal places. Laundering is used to get money back out of illegal places in a way they can spend as legal money - exactly a Bank of America account.
I still don't know why Stripe closed my account (I was selling cheap USB oscilloscopes online, never had a complaint. Couldn't get in contact with them at all when it happened.)
My bank account was closed because I filled in a KYC form incorrectly, and they didn't have a process in place to follow up properly when this had occurred.
My bank account was closed because I filled in a KYC form incorrectly, and they didn't have a process in place to follow up properly when this had occurred.
But if you’ve never been on the other side providing customer service, you may be astonished at the systemic fraud/illegal attempts happening constantly.
When I did CS at Blizzard for WoW at least half our work was dealing with compromised accounts (essentially by gold sellers), and then a good deal of “I’ve been hacked!” tickets were by the thieves trying to double steal from an account.
To put that in perspective, it was $100,000s or $1,000,000s in CS costs per month (at just Blizzard) to help customers who were victims of a large scale full time industry (not individuals, organisations) which compromises accounts to make a living.
People banned for confirmed cheating with 3rd party programs would make support requests repeatedly in the hope they’d come across an agent who “makes a mistake and accidentally unbans them”, occasionally you would see lots of them trying the same strategy or telling the same story since they saw a forum post of someone who said “this worked for me”.
Legitimate mistakes happen, but they’re like 1% of the time, the rest of the time it’s systemic attempted fraud.
So the person you’re replying to is most likely aware of this reality and says that “complaining on forums” is most often by people who aren’t telling the full story.
Hence them saying, if your story is legit, take it to the right place to get help, otherwise you’re looking like a just another fraudster (who do this systematically) trying to game the system in some way.
Lithuania has worked hard to become a fintech hub for Europe, and that isn’t based on a poor regulatory regime.
If you can bring actual facts to the table as to why the Lithuania banking license is inferior, we can have a discussion. Now you are just spouting baseless “Lithuania banking license is bad because of Lithuania” nonsense.
I only do this on the occasional Wednesday though when things are quiet at work
There also isn't a banking system without abuse prevention, and there can never be a way to write down the abuse prevention rules, or else they wouldn't work.
At the big G they told us we weren't allowed to pay bribes. And then there was a long section about not giving people noncash gifts to influence them, but what about bringing them to the free lunch, I think that was okay.
You can absolutely have a public forum to share tips on how to stop this from happening. Just know that said public forum will be mined by money launderers and fraudsters and whatever work around is posted will most likely fail to work within months.
You have to imagine that the banking system exists in an adversarial environment with money-launderers and fraudsters. And instead of code that will always do whats written, the interface is a squishy human for a majority of these interactions.
How banks figure out which transactions don't serve economic, business or lawful purpose? They can only figure out in a negative way. Either you should become a private banking client (in which case, you get a royal treatment through manual overrides, different compliance teams--just like first class vs economy class flights) or your banking routine should be four paystubs, 20 billpay, and debit card purchases. The more transactions (zelle, deposits, withdrawls, money orders, cashier checks) one is engaged in, the higher the chance that one will be SAR'ed though "transactions don't serve economic, business or lawful purpose".
Even if there is literally no crime to hide.
In other words, people exacerbate the problem by 10 times.
(1) We went through lots of acquisitions and mergers. We had no control over that, really!
(2) We deal with the public, and nobody could have seen that coming!
(3) Federal law prevents any due process.
(4) Senior management only cares about calls from congresspeople and tear jerking stories about widows (that could end up in the news.) If we screw enough peasants we can find some great bonuses!
(5) We have a semi-functional bureaucracy, which is in no way our fault. Honest!
(6) Some of our most valuable customers are silly old people who do not have degrees in computer science and expect to speak to a real human to resolve their problems. The nerve of those elderly fuddy duddies! Why can't they just learn to code like the rest of the human race.
I still think lying in behalf of a corporation should be a felony or (depending on the dollar amount involved);a capital crime.
Banking is too cheap to offer a hands on service for most people, hence automation and the lack of recourse.
Private banking doesn't suffer from any of these issues. Banks just assign a staff for like every 10-50 accounts, who offer white-glove support to any questions. Each private banking customer can generate $100k+ revenue for the bank in a year, hence support is possible.
Your average savings account generates like $10, that's worth 10 minutes of support annually.
Sure, a free savings account can’t generate enough behind-the-scenes revenue to cover its share of overhead in a multinational bank with a 300-layer org chart and fourteen divisions, but a $10/mo account would (and did) go a long way towards humanizing a community bank with a dozen branches.
Things don’t have to be like they are.
Also, local banks and credit unions are usually less competent than big banks. They can't afford competence. That's why most countries don't have local retail banks; the US is an outlier here.
I didn’t say “a century ago”, I said “for a century”
Local banks and credit unions still do it, competently enough to earn very high satisfaction ratings from their customers/members.
(And there are indeed still plenty of “housemaids and gas station attendants” so that was a weird aside anyway)
Wrong question. If they were popular with their customers they wouldn't be small banks, they'd be big banks.
(The exception is that because of regulations, there's businesses that only small banks can get into, so it may help to appear to be small.)
> (And there are indeed still plenty of “housemaids and gas station attendants” so that was a weird aside anyway)
Do you live in India?
What? That’s not how businesses work. Businesses don’t grow indefinitely, they size themselves to fit an underserved niche. Pretty much every census region still has one or several local banks and one or several credit unions, all serving the needs of people and businesses underserved by larger banks. And they do very well. Too much growth would precisely undermine their edge in serving these customers, for exactly the reasons I outlined in my original comment.
> Do you live in India?
No.
You're posting on a forum for a startup accelerator. That's pretty good evidence against that.
Anyway, there is structural pressure against a credit union growing, but not a bank; it just wants to profit like everything else. Like I said, the US is unique in having small banks. Most countries don't.
> No.
Then where are you seeing live in servants?
Only when legally required by law, and you end up paying for it in the price and availability -- ever tried getting gas in Oregon after 9pm?
Who's talking about lying anyway? Not answering a question about SARs is not lying.
This is meant sarcastically, right? Crypto is extremely efficient at causing people's life savings to evaporate
- Let individuals freely transact. Which as you rightly point out, has failed for good reasons.
- Prevent state institutions from controlling monetary policy. This has not failed yet - mainly because crypto is not even remotely big enough that the state has tried to control how much cryptocurrency is printed. If cryptocurrency ever gets big enough, we will find out whether it can withstand the pressure. While cryptography to secure your communications has withstood state pressure for 30 years now to not allow backdoors, I think the pressure on cryptocurrency will be higher.
How has it failed on this metric? A user holding crypto can transact freely and without intermediaries, that much is true of the blockchain. That some governments around the world may decide to restrict this activity with the threat of force (some countries more than others) does not mean it isn’t achieving its goals of a permissionless digital network.
The problem is that for the vast majority of people, the only way for X to acquire the cryptocurrency is to sign up for an exchange. And for Y to actually use it, they will have to convert to fiat via an exchange. And when signing up, X and Y will have to reveal complete financial details about themselves - home address, bank account details, identification document scans, etc.
This means that governments across the world now exercise significant control over who you transact with. And how much tax you pay for your crypto activities. If governments don't like you, they will force the exchange to kick you out. Or they will block all your bank accounts - like my own country often does - almost completely destroying your life.
This is a far cry from the early dreams of cryptocurrency, where people thought that governments would have close to zero control over their transactions. Yes, right now, crypto is a bit more free than other types of transfers, particularly for international transactions, but the noose tightens every year.
It doesn't matter what the technical details of the protocol are, what matters is what you can do in practice.
To make an analogy, see the laws and prohibitions around encryption. Many countries (USA, France, etc) have had severe restrictions on cryptography over the years; some countries like China still do have these in place, and others like UK are considering new laws that further impede access to encryption. Yet none of these policies are strong evidence of some failure of encryption technology and the ideas it has brought forth.
France, 1999:
> France to end severe encryption restrictions [...] Until 1996 anyone wishing to encrypt any document had to first receive an official sanction or risk fines from F6000 to F500,000 ($1000 to $89,300) and a 2-6 month jail term. Right now, apart from a handful of exemptions, any unauthorised use of encryption software is illegal. Encryption software can be used by anyone, but only if it's very easy to break.
https://www.theregister.com/1999/01/15/france_to_end_severe_...
You have to provide an account of your financial activities at the end of the year to your government, and lying on it will get you in serious hot water. You don't have to annually tell the government who you communicated with and how. So, you using encryption technology will never land you in trouble, unless the government catches you. For instance, millions pirate copyright material around the world, but governments find it very difficult to catch the ones setting up the sharing sites.
But any non-trivial usage of cryptocurrency has to be reported by you to the government, and if you don't the tax authorities will come after you. So the government at this point has close to complete control over which cryptocurrency transactions you can freely engage in, and which ones you can't.
How has this failed? Every month I transact in crypto while I could not do the same using traditional methods.
It turns out that scalable distributed systems are really hard, and scalable secure distributed systems are even harder - who knew.