Someone talks about De-Bank’s career on Saturday Night Live.
Attempting to poke fun at former President Donald Trump, the writers suggested on Saturday night that Trump had a mental “disability” and coined the term “de-bank” at a campaign rally. But for countless people who have had their financial accounts suspended or closed, unbanking is far from a joke.
The issue arose after Trump told an audience in New Hampshire that he would not allow banks and regulators to close people's accounts — a practice often called de-banking. Saturday Night Live's Colin Jost responded: “I don't know what the hell de-bank means, but you'd have to take a ‘de-ambulance' to see a ‘de-doctor'.” Americans across the country were not amused.
Unfortunately, being removed from the financial system is a problem that many Americans are forced to contend with. In the year In 2023, The New York Times detailed the stories of several people in the United States whose bank accounts had been arbitrarily closed without explanation. As one client described the experience, “I feel like I am. [at least] I need an explanation” and “The way they closed my account made me feel like a criminal.
Why Banks Are Closing Customer Accounts Abruptly (The New York Times November 5, 2023)
“Investigation of over 500 cases…shows the chaos when banks decide on their own to cut people off. Individuals can't pay their bills on time. Banks take weeks… pic.twitter.com/7WnGRlr56z
— Woke Insights (@WokeInsights) February 6, 2024
Cryptocurrency users are also well aware of the banking crisis. Nick Carter of Castle Island Ventures Describing what they called “Operation Choke Point 2.0” in early 2023, they said, “The US government is using the banking sector to organize a sophisticated and extensive campaign against the crypto industry.” Long pointed out that government officials have been putting pressure on a series of banks, with subsequent announcements that banks will shut down cryptocurrency services and cut ties with cryptocurrency users.
Related: Global policymakers are still pushing CBDCs despite setbacks.
That being said, although a quick reality check may have helped the writers on Saturday night, de-banking is not a word that will be thrown around many dinner tables. Indeed, much of the financial surveillance in the United States under the Bank Secrecy Act rarely makes its way into popular discourse. That's partly by design.
First, the targeted nature of financial controls makes them difficult to see in practice. When riot police are deployed, photos and videos of violence can spread quickly on social media as things go awry. However, when financial controls are used, the moment of impact is when victims receive a call from the bank or an error message in the app to inform them that they will not receive their money.
Howard Anglin, former deputy chief of staff to Canadian Prime Minister Stephen Harper, made this point well in 2022 when Prime Minister Justin Trudeau froze the bank accounts of hundreds of Canadian protesters.[The] The pervasive and undetectable nature of money enforcement means that oppression cannot be easily detected.
However, it is not only the intended effect that makes the issue difficult to monitor. Under US law, people are not allowed to know when banks share their information with the federal government. The process is confidential.
Related: Right to a Self-Hosted Wallet? Crypto laws must be passed by Congress in 2024
Banks are required by law to leave customers in the dark — even if those concerns are grounds for closing an account.
To further complicate matters, being the subject of a report or closed account does not necessarily mean someone is a criminal. For example, the top three reasons banks file suspicious reports on customers are suspicions about the source of funds, transactions under $10,000, and transactions with no economic purpose.
Worse, in a recent letter from South Carolina Senator Tim Scott, the Financial Crimes Enforcement Network (FINCEN) urged “private financial institutions to track customer transaction-level information using politically charged search terms.”
These are not smoking guns.
To be clear, there are many reasons why a bank may choose to close an account. Inactivity, breach of terms of service, repeated loans and restructuring can cause the bank to close accounts. To the extent those issues arise, banks should be free to operate within the law. However, bank deregulation, driven by political pressures and compliance costs, is another example of why financial privacy in the United States is long overdue for reform.
So while Trump shares his fair working conditions, banking is not one of them.
Nicholas Anthony is a policy analyst at the Center for Monetary and Financial Options at the Cato Institute. He Infrastructure Investment and Jobs Act Attack on Crypto: Asking Reason about Cryptocurrency Provisions and the Right to Financial Privacy: Creating a Better Framework for Financial Privacy in the Digital Age.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
