Debanking explained

I'm joined this week by Erik Torenberg, who heads Turpentine, the media network that publishes Complex Systems. Erik wanted to interview me about debanking, which I recently wrote about in Bits about Money. This has become a hot topic recently due to discourse in the tech industry (particularly among crypto fans) about politically motivated debanking, which has become a national political issue. As always, I'm pretty non-partisan in professional spaces, but as this is squarely on my beat, happy to share what I know.

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Timestamps

(00:19) Marc Andreessen's debanking claims
(01:02) Understanding debanking and its implications
(02:18) Crypto enthusiasts' perspective
(07:43) Operation Chokepoint: A historical context
(18:09) Sponsors: Vanta | Check
(20:23) Operation Chokepoint 2.0: The present day
(22:12) The fall of Silvergate Bank
(29:55) Crypto advocates and Silvergate Bank
(30:45) Sponsor: GiveWell
(31:43) Understanding bank account closures
(32:35) Bodegas and money services businesses
(36:38) Crypto companies and credit risk
(47:24) Debanking and its broader implications
(49:24) Political ramifications and free speech
(59:27) Wrap

Transcript

Erik Torenberg: Happy New Year. Great to see you.

Patrick McKenzie: Happy New Year, good to see you as well.

Marc Andreessen's debanking claims

Erik: I'm excited to do this. It's a bit overdue. There was this brouhaha a month ago when Marc Andreessen went on Joe Rogan's podcast and talked about what he saw as politically motivated debanking. As we've covered on this podcast and as you've discussed at length and written about, banking is very complex and people may not understand it

 You were the guy that many people were looking towards to make sense of it: Is this actually happening? Did this actually happen? What does this mean? So I wanted to have a dedicated conversation with you about the debanking that Marc was speaking about and maybe debanking more generally.

[Patrick notes: A16z, Andreessen’s VC firm, has a debanking explainer. It is a more concise, and slightly more measured, version of the claims than Andreessen’s press tour on them.] 

Understanding debanking and its implications

Patrick: Sure, happy to talk about this. For those who haven't seen it, I wrote a piece called "Debanking (And Debunking?)" which went through this in quite a bit of detail. I almost felt like I wanted to apologize to the audience for how long it was, but it's a complicated topic with a lot of facets to it. 

Marc and others make a lot of points. Among them are some points that I'm relatively sympathetic to—and given that I'm somewhat notorious as not being the most crypto-enthusiastic person in the world, I wanted to be fair to advocates where I felt they had a point. I also wanted to go into some of the places where there's confabulation about which actor was ordering what, or whether something was truly a private decision of an individual or entity versus a motivated decision based on government action versus a long and complicated procedural history. So yeah, happy to start this wherever you would like.

Erik: Sure, well maybe for those who missed it, why don't you characterize Marc's claims and then we can respond to them.

Crypto enthusiasts' perspective

Patrick: One thing I'll say at the outset: I have enormous respect for Marc Andreessen and A16Z broadly. I also think there's a number of people making claims like this—I'll broadly characterize them as crypto enthusiasts. Nick Carter has done a lot of work. He's another crypto VC and has published quite a bit about this in Pirate Wires, his own Castle Island Ventures podcast, and a few other places. This is not to say that this is a me-versus-them match, but I’m trying to identify the set of public intellectuals I'm responding to in this discourse.

So, let's start with the claims that have been made. First, the word "debanking." Debanking is an advocacy term. What I mean by an advocacy term is that it's intentionally chosen to smuggle in a bit about one's worldview and preferred policy preferences into the words used to describe something—in the same fashion that "death tax" versus "inheritance tax" is an advocacy term.

The central claim of debanking is that there's a legitimate user—whether an individual or a corporation—who has a bank account, and then the bank terminates their usage of the account and/or all their accounts for reasons that are not facially legitimate. 

Almost everyone listening to this podcast has a bank account. You pay your rent and/or mortgage out of it, you pay your employees out of it, etc. And you understand that losing access to your bank account on a very short timeline when you weren't planning to have that happen is an emergency. This establishes a certain amount of automatic regard for the person who has been affected by this debanking decision.

Then there's a conflation of that kind of debanking with a second kind: when a person or firm attempts to get a new bank account at a new bank and they are told no for a reason they don't like. Getting told no by a bank is generally speaking not an emergency—it's only an emergency if every bank tells you no. Our moral intuitions for what is happening here are different, in the same fashion that if you told me you got divorced this week, I would want to be extremely sympathetic because obviously your life is in total uproar, but if you told me you got turned down for a date this week, I wouldn't feel that you needed all the support I could offer.

Having started with this very user-centric view of banking, the crypto advocates smuggled in another thing: there are a couple of crypto-friendly banks that are largely speaking no longer with us, that had various supervisory actions against them which in some cases are correlated with them no longer being with us. Advocates do not like those supervisory actions.

I think I'm being fair in the following characterization, even though it is a negative one: The crypto advocates who are describing those supervisory actions are not familiar with the actions themselves, they are not familiar with the procedural history, and they do not have good mental models for how bank supervision generally works. That is the swath of activities that are coming in under this debanking moniker.

To characterize the advocates' claims:

1. There's been rampant debanking of crypto-using individuals and crypto-focused firms specifically because they use crypto

2. This is being intentionally coordinated by the federal government under the auspices of what they describe as "Operation Choke Point 2.0"

3. The federal government has intentionally closed banks that were crypto-friendly

4. While there are many federal regulators acting in concert under this Operation Choke Point 2.0 umbrella, one particular federal regulator—the Consumer Financial Protection Bureau (CFPB)—has been taking a particular whack at crypto firms and/or fintech companies and/or tech companies generally.

That's the constellation of claims that has been made under the debanking heading.

Operation Chokepoint: A historical context

Erik: Let's get into Operation Choke Point, just because it's valuable context to have here.

Patrick: Sure. Back during the Obama administration, society had many complicated goals. Presidential administrations have many complicated goals—one of the goals of the Obama administration originating in Washington (whether it originated in the White House is beside the point because administrations are larger than the White House; that's a basic feature of American government) was consumer protection in areas of long-standing interest to consumer advocates with respect to finance.

One specific sub-area was that many consumer advocates don't like the institution of payday loans. I don't know if I have to give disclaimers of my own point of view here—I also think payday loans are kind of a "burn it with fire" sort of industry, but be that as it may.

[Patrick notes: The best argument in favor of payday loans, which are an extremely high interest rate way for descriptively poor people to access cash in a hurry, is that their alternative ways to tap credit are even worse. For example, if your choices under scarcity are a) overdraft your bank account to pay the electricity bill, b) have your electricity turned off, or c) take out a payday loan, possibly the payday loan is your least worst option in a set of three very bad options.

So that is the industry’s best argument for why it should not be scoured from the earth with cleansing fire. Perhaps my history as an unpaid consumer advocate or phrasing there might tip my hat as to my own point of view here. But, nonetheless, payday loans are legal in many places in the U.S., and I have a presumptive automatic deference to the laws of democratic nations.]

Patrick: The Obama administration decided payday lenders were abusing people. There was a rapid spike in online payday lending, which they thought was particularly abusive, and they wanted to turn the screws on payday lenders.

Consumer lending is regulated on a state-by-state basis and in the United States system of government does not naturally roll up to the feds. [Patrick notes: Historically. The creation of the Consumer Financial Protection Bureau seems to federalize many issues which were previously handled at the state level. But that’s another ball of wax.] But that doesn't mean the feds have no preferences about it or no levers available. One lever they had was saying, "Okay, we're not really in the consumer lending regulation business per se. We're in the bank regulation business and payday lenders need bank accounts. If we make it more difficult for them to get bank accounts, there would be less payday lending—and since we think payday lending is basically straight-up evil, less of it in the world would be a wonderful thing."

How did they accomplish this? It starts in the Department of Justice. The DOJ pulls out this law from the late 1980s that was passed in response to the savings and loan crisis. That law (the name escapes me at the moment essentially federalizes the crime of defrauding a bank. One of the things that blew up these savings and loan trusts during the crisis was control frauds, where a bad actor essentially puppets the trusts and gives the depositors' money to themselves under fraudulent pretenses. Those frauds blew up some of the trusts, causing a gigantic loss to the entire industry and then a bailout.

 [Patrick notes: The referenced law was the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).]

Patrick: The law federalizes prosecution of frauds that "affect" (that's going to be a really important word in a moment) a financial institution that is federally insured. As you've seen from the FDIC logo slapped all over your bank and credit union websites, all the financial institutions that are doing anything interesting are federally insured. [Patrick notes: Please read this as a humorous observation; there are many things which consumers perceive to be financial institutions which are not FDIC insured.]

The Department of Justice comes up with a novel theory: if you are a bank and you have offered services to a less than salubrious entity, and that entity does things that could reflect upon your social standing in your community or with your regulator, then you have just "affected" a financial institution—to wit, yourself. They read this law as federally criminalizing the act of providing services to someone who then turns out to be a fraudster.

They start going after banks for this, and it works for a while. They have a few successful prosecutions and, as is often the case when the feds come knocking, people settle rather than choose to fight it, particularly when keeping one's relationship with one's regulator is important. There's a bit of a two-step during those prosecutions and settlement agreements: "Okay, there's this one particular payday loan company which we think is fraud-fraud-fraudy-fraud. You banked them. That's bad. You promise not to bank them again. And also you promise in the settlement agreement never to bank any other payday lender."

Now, payday lenders are legal under the laws of the United States. There is no authority in statute to just usurp Congress's [Patrick elaborates: or state legislatures’] ability to regulate what is and is not legal in the country. But the Department of Justice conjured this authority for itself out of the combination of a 30-year-old statute and a few court cases that they thought gave them some colorable authority.

They then talked to their buddies at the FDIC (who do not report to them, but same presidential administration, same broad set of policy priorities) and said, "Hey FDIC, we've been trying to go after this payday lending business and we're having some success here with bringing court cases against banks instead of trying to interdict the payday lenders directly—because there's fewer banks than there are payday lenders, this is more efficient. But you talk to a lot more banks than we do. Can you help us accelerate this process?"

The FDIC said "sure." There are these third-party payment processors that need banking rails, so we should call third-party payment processing a sort of high-risk activity because we are in the regulating bank risk business. We'll tell banks that to do high-risk activities, you need a built-out process. This will cause some banks to cease these activities that we've labeled as high-risk.

We'll put out a circular of all the industries we think are high-risk—maybe there'll be 30 of them or so. Let's make a list of everything we don't like in the world, and all those things are now high-risk. Are they high-risk because they're going to cause a bank to have a bank run? That magical thinking did appear in some documents about this, but to be clear, it is magical thinking. The only form of risk these businesses consistently represented was "we don't like them."

Thirty industries get added to the list. Some of them are outright evil: scams, for example. Some are challenging industries to bank but bankable, such as adult entertainment. Some are just bizarre for inclusion in this list—like fireworks sellers. Gun sellers were described as high-risk, which became extremely politically salient. And some were just a grab bag with no connection to banking whatsoever—just things a Democratic administration wouldn't like. "Racist materials" was on the list. One cannot like that kind of stuff, but there is no obvious reason by which it causes banks to fail. 

This came to light largely because banks, having received a list of high-risk businesses, started to send those businesses letters saying, "There's been recent regulatory scrutiny on your industry. This isn't that we have a sudden hatred for you specifically, but your industry is no longer within the risk appetite of this bank and hence we are closing your accounts effective either immediately (or in 30 days)." [Patrick notes: Industry advocates collected samples of these letters and then passed them to Congress, which is what started the brouhaha. You can pursue a sample on page 6 of this Congressional report.]

Many companies got variants of the same letter and, unlike the usual way debanking letters are written, those letters were pretty explicit about "hey, this is our regulators leaning on us." Eventually industries that had trade groups collected sufficient examples of these letters to say, "Wait, sounds like the federal government is just taking a whack at us." They went to Congress—members who were more sympathetic—and said, "It seems like the federal government has decided our industry shouldn't exist. Do you have a point of view on that?"

The gun industry in particular was very loud about it. Members of Congress started asking pointed questions of the FDIC and the Department of Justice. The FDIC started lying to Congress, saying there was absolutely nothing to this. [Patrick notes: A maximally fair recounting of this would say “Members of Congress accused the FDIC of exhibiting a lack of candor to Congress”, but I do not feel the shorter version is unfair or untrue.] This was complicated by contemporaneous reporting of the aim, intent, and mechanism of Operation Choke Point being in the Wall Street Journal. The higher-ups at the FDIC had forwarded that article around the office with "I am so glad that our important work on disrupting these industries' access to banking is finally being recognized. Great job for getting this placed in the Wall Street Journal." [Patrick notes: Not a quote, but a fair paraphrase.]

Congress found that email because, of course, it has subpoena power, and then went back to the FDIC and said, "We're a little pissed off that you lied to us earlier. What exactly is the full extent of this?" They did a bit of a postmortem process and, long story short, Operation Choke Point.

Operation Choke Point was in no way an informal thing, this was an official project (they picked their own code name, there were status meetings, kickoff emails, extensively documented all over the place)—the emails about it said what they said. And what they said was pretty damning.

Congress said, "We hate this and you should stop, because you have no legal authority for doing this. If you don't listen to this instruction, we will pass new legal authority to hold your feet to the fire." The presidential administration changed, and the new administration pretty much immediately threw it further under the bus than it already was. The FDIC/DOJ/administration's public message was that Operation Choke Point happened—they couldn't dissimulate about that because the emails say what they say—but it was being mischaracterized and "perhaps some mistakes were made" where they were "certainly not attempting to debank legal businesses" (which they were).

This was mostly forgotten for a number of years except by people who really geek out about banking infrastructure.

Operation Chokepoint 2.0: The present day

Erik: Yes, please fast forward to the present day.

Patrick: Operation Choke Point 2.0—there was no kickoff meeting for Operation Choke Point 2.0. There was not a bunch of lawyers at the Department of Justice saying, "You know, that name worked so well the first time." What actually happened was, I believe Nick Carter coined it because, in addition to being a crypto VC, he also reads the news and could remember this thing from the Obama administration. He thought "Ha, if I brand this constellation of activities regarding crypto banking that I don't like with the name of a shocking abuse of power from about ten years ago, it will make it very difficult for people to continue doing the things I don't like." So he popularized that branding for it.

Do I believe that is disingenuous? Not really. If you're an advocate, you can see the parallels between the thing you think is happening and the thing that definitely happened. It's certainly motivated in that there is a communication strategy here for achieving a political objective. As a sometimes communicator myself, it seems like a pretty effective communication strategy to associate things you don't like with things that nobody will waste breath defending.

But it's important to say that there probably is not a vast conspiracy happening right now. It's not like a bunch of Department of Justice employees having a kickoff meeting and a six-week after-action report where they say "this probably debanked legal businesses in addition to the scams we were targeting, but we're cool with that" (which is almost a direct quote from that report, by the way).

[Patrick notes: You might think I’m exaggerating. Quoting Congress quoting the email:

Finding substantial questions concerning the legality of the Internet payday lending business models and the loans underlying debits to consumers’ bank accounts, many banks have decided to stop processing transactions in support of Internet payday lenders. We consider this to be a significant accomplishment and positive change for consumers  . . . Although we recognize the possibility that banks may have therefore decided to stop doing business with legitimate lenders, we do not believe that such decisions should alter our investigative plans.

] 

The fall of Silvergate Bank

Patrick: So what is Choke Point 2.0? Well, again, it's whatever the crypto guys think has happened to banks recently that they don't like. They point to the failure of Silvergate.

Silvergate Bank was the First National Bank of Crypto. It was technically state-chartered, but it's funnier if you say First National because there are so many First Nationals in American banking—it's kind of like the first check into a company, there's always a hundred angels who say they were the first check.

Patrick: The First National Bank of Crypto, Silvergate Bank, failed—well, they didn't fail, that's an important thing to point out.

[Patrick notes: “Failure” of a bank is a very specific claim to specialists. It means the bank needed to be wound down, at the direction of authorities, to protect depositors. The FDIC is usually involved; administering the fund which backstops obligations to depositors and competently managing the resolution process is their reason to exist.] 

Patrick: Silvergate wound down in a relatively controlled manner after the collapse of FTX. Some people believe there was a future even after the collapse of FTX where Silvergate would have survived as an institution. Those people are probably wrong.

But people can say things that are probably wrong. Those who believed there was a future for Silvergate say that, in some cases, there was a thumb put on the scale by federal regulators, where regulators started giving verbal advice to banks that they needed to decrease their concentration of deposits within the crypto industry.

There were a bunch of dominoes that dropped all in a row: the FTX implosion happened, there were runs on several US banks—about plus or minus 15 of them in total—but the runs were essentially fatal at three: SVB, First Republic, and Signature.

Signature had a materially sized crypto practice. Silvergate was essentially a crypto specialist bank. SVB had some amount of touching the crypto industry, but it wasn't very material to the business. [Patrick notes: Most famously, they custodied a large portion of the funds backing USDC, a stablecoin, but SVB banked many fintech businesses, and this was in no meaningful way causational to their insolvency. As pointed out by Byrne Hobart, they had been insolvent for a while, and aside from some specialists at hedge funds, no one had really cared.] First Republic was even less exposed than that.

Regulators felt like there were crypto-caused runs happening, and when a crypto run happened, all the crypto people would stampede out of the market together. It has been alleged that the regulators went to a bunch of banks and said, "We want your crypto deposit concentration to be below a magic number. We're going to say that magic number is 15%. If your crypto deposit concentration is presently above that, manage it down effective immediately. If it is below that, don't do any expansion of your crypto banking practice that would cause it to cross the 15% threshold."

People say that given Silvergate's concentration was somewhere on the order of 96% or so, the 15% target was incompatible with Silvergate's continued existence. There are some other claims—sort of throw all the spaghetti at the wall and see what sticks—with respect to the demise of Silvergate. They were having obvious liquidity problems as all deposits left, so they needed to take out advances against the Federal Home Loan Bank system in San Francisco, and then the repayment of those advances was accelerated. Some people have claimed, mostly without evidence, that a letter from Elizabeth Warren and two other senators caused the acceleration.

Long story short, they say part of Operation Choke Point 2.0 is that regulators decided to kill Silvergate for being the crypto bank.

Crypto advocates and Silvergate Bank

[Patrick notes: I refer you to the debanking piece for a long and detailed discussion of why Silvergate and Signature are no longer with us. The executive summary is "They were incompetently operated financial institutions which suffered runs and would have needed extraordinary government support to survive, and both the incompetence and the regulators' disinclination to have crypto within the regulated perimeter influenced the decision to not award extraordinary support." Crypto advocates might round that to "They were killed for supporting crypto!", but one observes that e.g. Coinbase still banks at e.g. Chase.

Anyhow, a simplified verbal gloss of that discussion follows.]

Patrick: I spend a substantial amount of time in my piece discussing the rise to stardom and then failure—or again, failure is sort of a reserved word with respect to discussing banks—the voluntary dissolution of Silvergate Bank. Silvergate Bank was not a competently run institution. The collapse of FTX brought that to very painfully obvious light.

I'm going to say the following is only my point of view on it, but I believe it is an extremely well-evidenced point of view: Silvergate had been complicit in trillions of dollars of money laundering because they had implemented something called the Silvergate Exchange Network, which was essentially a real-time settlement API for crypto companies. Their anti-money laundering software, which all banks are required—not kind of, they are required—to have running all the time, was just turned off with respect to all the send transfers due to essentially technical incompetence reasons.

Silvergate was extremely aware of their own technical incompetence for a period of about a year but did not rectify it. That's a bad set of facts for a regulated financial institution, to put it mildly. Sometimes people have compliance failures, or sometimes they fail to configure their software correctly, and your regulator will be pretty cross with you. But when it directly enables a bad actor siphoning billions of dollars from investors, users, etc., and you as the bank don't catch that because you were blind to it—that's a bad set of facts.

It has been persuasively alleged by people who were complicit in the FTX fraud scheme, including Ryan Salame, who was essentially their chief bank guy (in addition to being SBF's cut-out for giving donations to politicians on the red side of the aisle). Ryan Salame said—this is not a direct quote, but it's substantially accurate—that Silvergate orchestrated with him the bank fraud needed to make the scheme work. Specifically, they helped him open accounts for a paper corporation, North Dimension, to receive FTX customer fund flows where North Dimension had no real business. Everyone understood that. It had a website which falsely claimed they sold cheap cell phones, but there were no cell phones actually being sold. This was just to launder money in from FTX customers who would wire money into North Dimension and put "deposit to my FTX account" in the memo for the wire. The bank was aware of this as it was happening, though the bank executives swear blind that they were not aware.

Now, Ryan Salame is a confessed money launderer who was proximately in the room while billions of dollars were stolen from people. So that's perhaps a bit of evidence against whether he always tells the truth with respect to his activities. However, he's not an idiot about how banks work. I am also not an idiot about how banks work, and a thing that I unreservedly agree with Ryan on is that you can't not know. The FTX constellation was at one point their biggest customer. You just can't not know. The legal system might say "you either knew or were reckless in not knowing" that the hinkiness was going on.

After that has happened, the bank is going to die.

I've worked in the financial industry before. Everyone has to take mandatory compliance training, and a thing that is said early in mandatory compliance training is: it's very important that you listen to us. We consider this to be very, very important because if we do not actually comply with all the laws that regulate our behavior, the regulators can do anything to us. Most likely, the "anything" that will happen is very large fines. Here are several billion-dollar fines that have been assessed in the recent past for failing to do KYC or AML up to the regulator's standards. However, when we say they could do "anything", they could do "anything" up to and including closing this firm.

[Patrick notes: Another form of "anything" which is available as a sanction is "You have a line of business and like it. We do not. Turn it off." Some advocates purport to be surprised at this and believe they are being punished unfairly and without due process of law. Punished: oh yes. Unfairly: trillions of dollars in money laundering. Due process of law: see the written record.

I am most sympathetic with the point advocates make that "If we're doing these punishments intentionally we should be open and honest about that fact." For their own reasons, banking regulators frequently decline to disclose punishments, because they do not want to imperil the safety of the banking system by suggesting to depositors/investors that a particular bank is under a cloud. They simultaneously want to still be able to punish banks for outrageous behavior. And thus the "We call you into a closed room, yell a lot, and then give you a letter with demands which we hide from the public view. You will be released from the demands after you demonstrate a few years of progress against the action plan we discussed." Crypto-friendly banks are very not the only banks that have had this happen to them.]

Patrick: Of basically any financial institution in history, I think there's a reasonable case to make that Silvergate was most the poster child for getting that extraordinary remedy applied to it. [Patrick notes: This claim is exaggerated. Histories of the S&L crisis are wild reading, for example. Also, Tether has had banks, and clearly laundering tens of billions of dollars for Tether is worse than anything that Silv... oh wait.]

Patrick: But crypto really likes having a bank that everybody at crypto can bank at—it's extremely operationally helpful. So many crypto advocates have kind of retconned their understanding of Silvergate Bank to be: they were great and they had this very useful product. Did they have some failures with regards to regulations? Well, I don't know, I'm not a bank regulation expert or anything, but it certainly seems like the federal government killed them because they were the First Bank of Crypto.

I think there is some motivated reasoning going on about how people profess to have a great understanding of relatively obscure decisions made by the Department of Justice during the Obama administration but have suddenly never heard of what anti-money laundering regulation means when it actually applies to a bank that they care about.

Am I being a bit unfair there? I think I'm being mostly fair.

Understanding bank account closures

Erik: Say more about what you think the Nick Carters or the Marc Andreessens or that group more broadly is missing, or that someone who just hears that story doesn't fully understand to get the full picture. What have we not yet covered that's important for them to know?

Patrick: Let's start with the letters you get if a bank chooses to close all your accounts. They will sometimes use words like "is a commercial decision of the bank" and "this will not be reversed." I think crypto advocates generally don't have a good mental model of why a legal business could get this letter in a way that is not a mistake.

Bodegas and money services businesses

There are a variety of ways you can get this letter in a way that is not a mistake. To use a business that is unambiguously legal: it is perfectly okay to operate a bodega in the United States. Your friendly corner store that sells delicious sandwiches is an upstanding member of the community. Everybody loves them. That's fine. You can bank bodegas. However, many bodegas have a sideline in alternate financial services. For example, they might sell money orders.

If you sell money orders of $1 or more, you are a money services business (MSB). There are a panoply of regulatory requirements necessary to compliantly operate a money services business. Many listeners have been in a bodega before, and you might have a point of view about the types of entrepreneurs who are likely to run bodegas. You might reasonably understand that the types of entrepreneurs who are likely to run bodegas are not exactly equivalent to the kind of people who staff banking compliance departments. They will frequently not live up to all the criteria that the government requires from money services businesses.

Several sub-organizations within the federal government are extremely pissed off at specifically bodegas regarding them being money services businesses. If you look at the Financial Crime Enforcement Network's webpage where they list enforcement actions, about half of those enforcement actions are at bodegas specifically—or not exactly a bodega but a business that has the same shape in society as a bodega, like somebody who sells cheap cell phones.

FinCEN doesn't allege in those enforcement actions that it said it was a bodega on the outside but was actually a front for Russian intelligence services. No, when you read the enforcement actions, it's pretty clear: this is actually a bodega, but they didn't file all the paperwork, they didn't check all the boxes, and so they were running a non-compliant MSB. So FinCEN fined them.

Banking regulators are extremely aware that FinCEN, which is also a banking regulator (kind of), is on the hunt for these rogue bodegas—not the sandwich-selling bodegas, just the ones that have ever sold a money order and not been fully compliant in all the things you need to do to sell a money order. "Be on the lookout for rogue bodegas."

So if you open an account at your local bank and say, "I am a responsible business owner in my community. I want a bank account for the usual things—to take money from customers and then to pay out my employees and to pay for electricity, etc." And you open a bank account, and a couple months later in the course of their routine monitoring of the bank account, the bank sees a debit from Western Union for money orders—they are going to come to the conclusion that you are probably a Western Union agent, which means you're a money services business.

The bank could, in theory, ask you to come back to the bank, bring all your paperwork about being a money service business. We need to have an unscheduled private audit of whether you are a fully compliant money services business. But that takes a whole lot of work, and it implies the existence of a whole lot of structure within that bank specifically that can adjudicate whether someone is a compliant money services business.

Most banks don't have that structure. What they will instead say is: Money services businesses are on our high-risk list. And as we don't have an enhanced due diligence process that can satisfy us that a particular money services business is compliant, we will decline the business of money services businesses. And so when the bank comes to the conclusion in month six of your bodega being an MSB, they will say, "We don't have anything against you. This is not an accusation of crime. This is not an accusation that you're a bad person, but we can't bank your business anymore. So take your money back as quickly as you can arrange it and find another bank that will bank you."

That sort of thing has certainly happened to at least some crypto enthusiasts, either at the individual level or at the firm level.

Crypto enthusiasts also don't understand that the standard banking checking account, which is the product they profess to be most concerned about because every business needs a checking account, is a credit product and has credit risk associated with it.

Most people who are not banking specialists don't understand an American bank account is a credit product. They think, "Oh, that's a deposit product. If you get a line of credit from a bank or if you have a credit card or mortgage, that's a credit product. Obviously, there's credit risk involved in the mortgage. But there's not credit risk involved in just having a checking account."

That point of view is understandable and wrong. There is no way to have a checking account in the United States that is fit for the usual purposes you want to use a checking account and not have credit risk. Indeed, there have been legal, relatively professionally operated, relatively well-loved, backed by legitimate investors, indeed publicly traded crypto companies that have caused their banks huge amounts of credit losses.

This happens when: one, the business fails, and then two, all the recent payments that were made into that company by customers who are now theoretically claimants against the bankruptcy estate start to get disputed with their banks. An explicit example of this was Voyager Digital, which was publicly traded in Canada but primarily served US users.

This was a firm where there were adults at the helm. They had risk procedures—those risk procedures were extremely inadequate, but they had them—and they failed as a proximate result of making bad risk decisions. When they failed, many people had the experience of "I just sent money into this app on my phone to buy Bitcoin. I now don't have my money and I also don't have my Bitcoin. I think I just got defrauded by these bastards on the internet."

[Patrick notes: A full recounting of Voyager Digital's comically bad risk decisions is outside the scope of this inline note, but many are alluded to by the CFTC. Greater than 30% of the loan book in a single counterparty, etc etc. Also let me just quote this verbatim:

...Voyager conveyed pooled customer assets to counterparties at high risk of default, including Firm A (now bankrupt), Firm B (the now-bankrupt trading arm of a now-bankrupt digital asset trading platform), Firm C (now bankrupt), and Firm D (now bankrupt). Voyager inaccurately determined each counterparty was low risk. Voyager personnel lacked sufficient experience assessing counterparty risk and conducted grossly insufficient due diligence on its counterparties.

A was Three Arrows Capital and "refused to provide any financial statements (much less audited ones) in response to Voyager’s request."

B was Alameda. "On June 13, 2022, while still officially concluding Firm B was low risk, [CEO] Ehrlich privately confided to a professional athlete, “My biggest fear is that [Firm B] is a house of cards. Not for us but will blow up the industry[.]”

I could go on, but I think this suffices to make the point: many crypto companies believe they have a good understanding of risk, they have been extended grace based on that representation, and then they have been thoroughly beclowned.]

Patrick: And so customers called their bank and said exactly that. The bank said, "That sounds like you were defrauded. We'll give you your money back." And they pulled money from Voyager. Voyager didn't have the money to distribute because Voyager was in bankruptcy at the time.

One of the downstream consequences of filing for bankruptcy is that money doesn't vanish from your bank accounts anymore—but there is no bankruptcy exception to reversing an ACH in the United States. The ACH is going to come back whether the rest of the world wants it to or not.

What happened was Voyager Digital's bank, Metropolitan Commercial, sent back the money but was not able to recover it from Voyager Digital because Voyager was in bankruptcy. They essentially paid for it out of their own shareholders' pockets—it's a credit loss. It was a pretty materially sized credit loss.

In fact, it was materially sized enough that Voyager made a series of urgent pleas to the bankruptcy judge to please allow them to do a variety of procedural things to allow them to contest these reversals on behalf of Voyager Digital because they thought it would otherwise cause damage to both the bankruptcy estate and their bank directly. (The judge gave them permission to do that.)

From the bank's perspective, crypto people have said crypto businesses are legitimate—and no reasonable person says that Voyager Digital was not legitimate—but it's also a very risky business, and it single-handedly sunk Metropolitan's crypto practice.

Patrick: This is a risk when you are banking fast-growing financial services firms. It has more than zero relevance to why banks might not want to bank legitimate crypto startups, because the story you tell your investor, if you are a legitimate crypto startup, is "We're going to be doing some things, we will swiftly convince lots and lots of users to use us, they will swiftly send us all of the money, and you will make a great return on your investment."

[Patrick notes: Out of a sense of love for all startup entrepreneurs I would recommend you internalize the following paragraph because it is important regardless of what your business is.]

Patrick:That's great news for your investors because they have capped downside—they can only lose as much as they invest in you—and uncapped upside. Your bank, on the other hand, has uncapped downside, which increases every day as your business gets larger, and capped upside. They can only charge you X percent of whatever they are doing for payment services or make money on the net interest margin.

The physics of money are unfavorable to this arrangement, which is why banks are extremely careful about banking financial services firms. As crypto grows up a little bit and stops larping as financial services firms and turns into actual financial services firms, frankly, they need to start understanding this math and understanding that simply walking into a bank and saying, "I think I'm going to start a financial services firm, will you give me all of the things I want to get from you?"—they're not going to say yes to that by default. They're going to be extremely skeptical.

Crypto is also running up against many years of history at this point. It was difficult to get bank accounts for crypto businesses back in 2011. That's a historical fact. Many early crypto firms that are now household names, at least if you listen to this podcast, will tell you somewhat quietly about various shenanigans they had to do back in those days that unlocked their growth path to today.

Back in 2011, you could be forgiven as a crypto advocate for saying banks don't want to bank us because they are stodgy, overly conservative, and don't understand the potential of Bitcoin or blockchain technology to revolutionize the world. Fast forward almost 15 years [from the Bitcoin whitepaper]: Banks have definitely heard the pitch at this point, and they have observed what happens to other banks that have bought that pitch, and they don't like the outcomes those banks got.

[Patrick notes: To which I model crypto advocates as saying "But banks were denied ability to do experiments with relatively low-risk crypto products, per the FOIAed letters from the FDIC et al." Again, if you perceive offering checking accounts to legal businesses to not be a credit decision, you're straightforwardly wrong, despite the perception that checking accounts are a low-risk product.]

Patrick: So in part, crypto is having difficulty gaining access to banking services because banks are making rational decisions that this particular community of entrepreneurs has kind of cowboy risk controls, frequently leaves the bank holding the bag, and ends up on the front page of the New York Times after having swindled customers of many billions of dollars and drags every bank they banked with into that maelstrom for the next 12 months.

It is not an irrational decision by banks to avoid having crypto practices, and it also isn't a decision that has to be shouted down from the White House to be accepted in a variety of places.

That is a thing that I think advocates either don't understand or are a little bit cagey with respect to saying that they understand.

Advocates have a good point adjacent to it though: banks are, in a very real way, a policy arm of the government. That is one of the things that crypto advocates are most right about, which is a thing that the "tradfi" definitely understands about itself and is also socialized to not say in as many words. Crypto folks just say it out loud: banks are a policy arm.

I don't speak for the entire banking industry by any stretch of the imagination, but as someone who's very crypto skeptical, I agree with them unreservedly here: banks are a policy arm.

To the extent that banks are a policy arm, we expect the government to not stereotype people in, for example, law enforcement. We want individualized assessment of the person that is before the court. And if there was an accusation made, it should be particularized and there should be an investigative process and due process. That stuff doesn't really happen in banking, not to the same degree of rigor that we expect in our court system.

[Patrick notes: The architects of the American systems of government are willing to trade off "being right" and "being legitimate." We do it every time a murderer walks because of improper chain of custody for evidence. (Infrequent but it happens.) Banks mostly settle for "being right" unless you tell them that it is illegal to be right.]

Patrick: Should we expect this process to happen in banking? I can understand why that would be attractive to many people. But it's obviously ludicrous to expect for certain banking products. Taking this point of view at face value, if you walk into a bank and say, "I have never not paid you back money, so you must issue me a loan, until you have evidence that I won't pay you that loan back"—that's a recipe for every bank going out of business.

[Patrick notes: And, of course, if someone has been convicted of five murders already, and the DA says "Well on a probabilistic business we're priced into the sixth murder already so let's sentence him for it and save everyone some time", there would be pandemonium in the courtroom followed by swift, universal censure.]

Crypto companies and credit risk

We allow banks to say, "We don't need an individualized suspicion about you, the potential borrower. We're going to have you fill out an application for this loan, then we're going to read things on that application, then we're going to use our experience of having banked lots and lots of people over the years, and credit scores, to build a model of whether you will successfully pay this loan back or not." And if we come to the conclusion that you are 92% likely to pay the loan back, you won't get this loan or it will be very expensive. As I wrote in my article, "92% was an A-minus in high school—it's not in finance."

Most people who are declined for loans are not declined because they are bad people. They are declined because they are risks that do not fit within the risk envelope of a bank. And that is also a reason why you can get declined for checking accounts.

One specific mechanism by which you can get declined for checking accounts is if you have previously had a checking account, made not great use of it, overdrafted, and then had the account closed on you because you didn't pay for the overdraft fee. If ChexSystems has a record that you did that, you will probably not successfully open a checking account for a while.

[Patrick notes: ChexSystems is a specialized credit reporting agency. If you ever are walking around downtown Chicago mortgage shopping, and open an account at the second bank that day, you may well be asked "Did you just open a bank account thirty minutes ago?!" It will cause you much embarassment if, like me, you tell the second banker "Oh wow I didn't know ChexSystems was that fast; that's impressive." Why does the second bank care? Because it looks like an identity thief is attempting to hit every bank in town.]

Patrick: We allow banks to do that. Different societies make policy choices with regards to what degree they allow banks to make decisions. But we have broadly in the United States allowed banks to make those kinds of decisions as long as banks don't use factors that United States policy considers invidious with respect to making those decisions. For example, we definitely don't allow you to discriminate based on race in lending decisions. (That's one of a long list of things.) But we do allow you to make decisions based on the apparent likelihood of success of a business.

There are crypto advocates who say banks don't understand enough that if a crypto startup comes to them, it is extremely likely to succeed. And banks are like, "Show us the research. This is not what our impression of watching our industry or your industry for 15 years looks like." And banks have basically carte blanche to make that sort of decision and probably should, although people of goodwill can have differences of opinion on it.

Erik: That all makes sense as a helpful overview and context. So what have we not discussed related to this topic in terms of someone getting a full picture of what's appropriate? We talked a lot about the crypto side, but the political...

Patrick: If I can zoom out from crypto for a moment: Many people get debanked in the world. I've been debanked twice. You can read the anecdotes in the article if you care about it.

Substantially nobody likes the experience of it. Very many people who are debanked do not understand what is happening because the typical profile for being debanked is being relatively less resourced, beingrelatively less educated, and dealing deal with other axes of disadvantage in society—all the usual ones and then some which are kind of weird.

Many people would be able to predict that if you are an immigrant who is less capable of having a professional conversation in the language banking is locally conducted in, you would have a difficult time interfacing with the banking system.

[Patrick notes: This immigrant, once upon a time, needed to open a bank account while not knowing how to write his address. I was a student in Kyoto studying Japanese, and I needed a bank account in Japan because I prefer eating to not eating in the typical yar. The study abroad program disbursed the monthly food allowance via a bank transfer. I was informed that the policy was that the bank was not allowed to assist me in writing my own address. My recollection is that I traced my address onto the form, and the institution was satisfied by that.]

Non-specialists are less likely to predict that being a bodega is public enemy number one.

The focus on debanking of crypto entrepreneurs and similar is focusing on the relatively rare case where debanking happens to someone who is extremely well-educated, extremely socially established, and likely economically well-off.

Debanking and its broader implications

To the extent that one is really morally motivated to increase access to the banking system, it's helpful to understand that this particular lens on debanking is a very, very small case of a much larger picture.

One could reasonably ask for things like better statistics on this—we don't have any good stats because the system's general understanding is that debanking is a commercial decision of individual banks. We don't specifically ask the banks to keep stats on account closures or reasons for them. Maybe we should start aggregating those stats and have a better picture of where the industry is.

This is a policy priority that a hypothetical crypto advocate could advance in Washington where I'd immediately stick up my hand and say "I support this, unreservedly, as a sometimes advocate for banking consumers and as a responsible professional in this industry."

Political ramifications and free speech

As for the political ramifications—we could have an entire other podcast on this, but other people with a better point of view on the matter have already had it.

There were more than a few government actions explicitly aimed at the tech industry over the last couple years that the tech industry is annoyed about because they seem to be arbitrary, lawless, or some combination of the two. Mark Zuckerberg was on Joe Rogan this morning as of the recording of this recording discussing this in some detail.

Marc Andreessen has mentioned it himself and tied these two threads together. [Patrick notes: His interview with Bari Weiss was really good.]

On the one hand, there were actors at various federal agencies and also at the White House who—the actors would describe it as "jawboning." Other people might describe it as issuing illegal orders to attempt to circumvent the First Amendment to get the social media platforms to crack down on speech that the actors did not like for various reasons such as misinformation. This became a court case—I'm blanking on the name—it went up to the Supreme Court. [Patrick notes: Murphy et al vs Missouri et al.]

The Supreme Court declined to intervene due to standing problems, but Justice Alito's dissent [Patrick notes: same link; ctrl-F "Justice Alito"] says if the lower court was right about the factual record in front of it, this is probably one of the most important free speech cases we've had in a number of years. I think Justice Alito is substantially right with regards to that.

So one of the priorities of some people in the tech industry, including some folks who are right-aligned or explicitly back the Trump campaign, is that this constellation of anti-tech activities that were also anti-free speech activities were outrageous, morally mistaken, unconstitutional, illegal. We have engaged in the political system to have the political system do less of this in the future. We want hearings and accounting for what happened, a dismantling of the various mechanisms that were used to enact this thing. And then debanking kind of rhymed with this and gets tied to it.

I try to be nonpartisan in professional spaces for a variety of reasons, one reason being that the tech industry truly was not accepting of a vast diversity of political opinions for a number of years over the course of recent history. Were there orders sent by the federal government to Facebook, ordering Facebook to clamp down on protected political speech? Yes. We have the emails. Those emails say what they said.

[Patrick notes: The opinion of the lower court excerpts the emails. I treat things written by U.S. federal judges as being dispositive evidence that the sequence of words they quote was in an email written by a federal officer. Those emails unambiguously direct restrictions on speech.

Justice Alito's dissent is this argument presented in depth and with vigor.

I understand that acknowledging the truth that the outgoing administration used the tech industry as catspaws is politically contentious. But it happened. It does not follow from that that there must exist an email, somewhere, somewhere very secretive indeed, where the White House specifically directed the debanking of [insert name of alleged victim here.] I understand that claim is also now politically contentious. And, as someone who feels some sense of obligation to the truth, I am frustrated to see these two claims get conflated with each other, and frustrated that some commentators adopt radically different standards of evidence for claims based on the political valence of them being true.

As an example of a radically different standard of evidence: The CEO and a board member of a publicly traded company are currently on a press tour stating their retrospective regret that the company participated in invidious acts. In what other circumstance is that not immediately credited as an admission against interests. If the CEO and a board member of a bank get on TV and reference the letter they wrote to Congress about a troubling series of frauds they were knowing participants in I think all reasonable people understand the bank actually participated in fraud even before they need to read the emails specifically directing the fraud. Which, again, exist.]

Patrick notes: There's also an emergent complex systems angle to this, where the deplatforming decisions at social media companies kind of bubble up from a portion of the organization sometimes called Trust and Safety. Trust and Safety might hypothetically be located in San Francisco and staffed by 20-something employees—which is a bit of a handwavy oversimplification, but let's say young non-engineering professional employees in San Francisco with college degrees who intentionally decide to work as hall monitors judging every human utterance and stick in that position for a number of years.

I think people across the American political spectrum can understand that the kind of person who gets through all those filters is much more likely to say "freeze peach" rather than "free speech." They have a bit more ideological alignment with the ACLU of 2024 and a lot less with the ACLU of 1990.

[Patrick notes: For the benefit of international readers, the ACLU of the first half of my life was a well-respected liberal-coded non-profit advocacy organization strenuously opposed to any government impositions on speech. The ACLU of more recent years... not merely does not consider that a priority, but considers having a high regard for free speech to be a sign that one is the enemy. I realize this gloss is bracing but it has been earned. See, among many other places, the New York Times, which politically aware Americans would describe as a broadly aligned publication: Once a Bastion of Free Speech, the A.C.L.U. Faces an Identity Crisis]

Patrick: And so while there was coordinated top-down directed action against certain disfavored speech, you can also imagine through a variety of pathways, bottom-up action by people who were broadly sympathetic to the administration's aims. Due to the politics of the people making the decisions, this would cause a slant in the rules as applied even if the rules were facially neutral.

Fair-minded observers of the tech industry who are well-informed would not tell you that the rules were actually facially neutral nor that they were applied in an even-handed fashion.

This gets conflated with the debanking issue, and you can imagine similar mechanisms for the bottom-up approach to inflicting harm on one's political opponents that might happen in banking or financial services, even in the absence of directed federal action. And I think that is an important thing to be aware of.

There is a bit of good news here: The good news is that bank compliance departments are not all based in a seven by seven mile area that has a very particular political slant to it.

Counterbalanced against that, bank compliance departments are intentionally a monoculture in that they select for the most rule-following, ingratiating with respect to authority, hierarchy-worshipping people that have ever walked the face of the earth. And I say that as someone who passed his annual compliance training with flying colors. But because of that monoculture, there is a risk of having politically inflected or otherwise improper actions happen due to instantaneous cultural alignment, in a way similar to how tech companies had bottom-up instantaneous cultural alignment against politically disfavored actors over the course of the last couple of years.

I have some degree of sympathy for the argument that in the course of attempting to clip Big Tech's wings, the federal government directed unconscionable amounts of infringements on the rights of ordinary Americans and other users of tech platforms. "Hope that doesn't happen in the future," he says, vacuously.

There are polities that make very different decisions based on that. Some of our friends in Europe have very good-tasting bread and very bad taste in political liberty. I can continue being friends with them and continue consuming the bread and being glad that many of the decisions made in tech are made in a country that has a great degree of regard for individual liberty.

One thing we didn't mention, which I will mention as an aside: What would it look like if the federal government came up with a list of names of our enemies who we don't like for political reasons and told the banking industry, "Turn off all these people's accounts"? It would look like what Canada did with respect to the protests in Ottawa and other places in Canada against the COVID lockdown mandates, which were broadly called the trucker convoy protests or Freedom Convoy protests (though they weren't entirely co-extensive with that—it's a branding thing).

Canada invoked the Emergencies Act and basically said, "This political protest is the equivalent of a foreign invasion, so we are going to give the entire financial industry a list of names and they're going to turn off all economic activity of this list of names immediately with the goal of making it impossible for them to continue their political protest, which we believe is disruptive."

Patrick: Political protests are frequently disruptive and they're frequently really annoying too—when they are for causes you don't support. Political protesting not infrequently involves committing crimes in a variety of countries, inclusive of the United States and Canada. It's the broad understanding of constitutional democracies that when someone commits a crime, you arrest them, then you charge them with a crime, then you convict them of the crime, and then and only then you punish them.

But that's not what Canada did. Canada came up with an enemies list and started turning off their ability to feed their families. And in the inquiry after this happened, one of the ministers involved said, "It wasn't our intent to go after the families, but..."—pause to acknowledge that Canada is a free nation or a mostly free nation, a constitutional democracy. When a democracy needs to say that in the course of a national level inquiry, something truly messed up has happened.

[Patrick notes: Quoting from a newspaper reporting an open session of parliament:

[Finance Canada assistant deputy minister], who led the team that developed the financial tools that were used with the invocation of the act on Feb. 14, admitted that there might have been some unintended consequences for people who were not involved in the protests against pandemic restrictions last winter.

“The intent was not to get at the family, or to have any of those impacts. That was not the focus. The focus was to be able to act quickly,” said [that individual].

]

So while I don't agree with advocates that the United States has an official policy of coming up with an enemies list and passing it out to banks—because that list actually doesn't exist—there is a risk that a future incredibly unprincipled American government could use its control of the financial industry to attempt to do something similar to what Canada very definitely did. And we should not do that. We should not consequence people for political speech, even very vexatious political speech.

[Patrick notes: How would a financial technologist know there is no secret enemies list? One is that there is a very open enemies list. It's called the Office of Foreign Asset Control List of Specially Designated Nationals. OFAC describes it here; the quick gloss is "foreign enemies of the U.S." You yourself can trivialyl peruse this list. Banks et al in the United States are obligated by law to write computer code which parses this list. Venture capital firms have funded B2B SaaS companies which implement "OFAC screening" so that fintech companies can satisfy this requirement.

You can read computer code to make confident representations of what it does and does not do. And what it does not do is query the double-secret domestic enemies list.

Now Canada, on the other hand? Canada very much had a spreadsheet. The Royal Canadian Mounted Police wrote the contents of it and caused it to be conveyed to financial services providers, with the open order to interdict all transactions of all of their accounts in any form and for any purpose whatsoever. This has been abundantly publicly reported.]

Patrick: Even to the extent that you're consequencing people for actions, the consequences should probably follow arrest for a crime and then conviction by a jury of their peers. This feels like a very Civics 101 kind of thing, but Civics 101 was violated pretty egregiously. And so to the extent that advocates are worried about slouching into a very anti-democratic system of societal control based on shelling out to parts of American society which have a lot of power but don't have a lot of institutional constraints with respect to exercising that power—I think those are real risks. I disagree with advocates with regards to some things, but again, can agree that they do have points with respect to some places.

Erik: That all makes sense. Is there anything we haven't yet covered? This has been pretty thorough, but want to make sure to leave our listeners with anything else.

Patrick: Let's see. There's a phrase in politics, "somebody has an agenda" and that is often used as a bit of a slur in politics. I think it is very important within a democratic society that some people have agendas because that's how we get things done. And so I don't want to say that "crypto has an agenda" as a way to demean the crypto folks.

But crypto does have a policy agenda. And the reason you are hearing about debanking and the reason that it is being tied very tightly to actions of an administration that was recently trounced in the polls for various reasons is that crypto thinks that by establishing that political narrative, crypto will get a variety of things that they want out of the government. Some of those things are relatively tightly tied to the set of grievances that they have with respect to banking. Some of those things are not.

This is politics. I'm not a professional political commentator, but it's important to understand that when gifted communicators put a lot of effort into a political project, they want to get something out of that. And it's important to understand what is the list of things that they want to get out. And as someone who is a bit crypto skeptical, perhaps people wouldn't trust me on particularly what those things are. So you can just read their position papers and they will tell you, "here's our list of asks."

But I would encourage people to read those list of asks if they are involved in the political process and maybe calibrate whether they want to say yes to them versus saying, "I'm opposed to the banking thing, and therefore I will give crypto everything that they ask for."

Erik: Yeah, that sounds like a good way to close this episode. Patrick, thank you for giving a thorough explanation of what's been going on and what's important for people to know beyond just what they hear from some of these figures we've been discussing.

Patrick: Always happy to help. And again, there is perhaps a bit of an oppositional frame to this, but this was my hobby before it was my job. I'm very happy to point to the cases about the procedural history where I think they're substantially accurate as regards to it. And then just try to explain boring banking back office stuff to the very large portion of the world that very sensibly has not delved into that topic.

Erik: Yeah, and for those who do want to go deeper, do highly recommend the blog post that we'll link to in the show notes.

Patrick: Yep. And if anybody listening has the kind of brain damage that likes hearing about this kind of stuff on a regular basis, bitsaboutmoney.com—you should probably sign up to that newsletter.

Erik: Yeah, absolutely. Okay, until next time, Patrick.

Patrick: Thanks very much.