People are massively dishonest about this, though. Like there are occasional Ask HN posts where someone is outraged that their bank/payment account was closed for “no reason”, but eventually it comes out that they’re in North Korea selling cannabis to Iran or something.
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.
Completely agree that banks should provide prescriptive guides.
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.
Couldn't you just send a wire?
Those typically have huge fees.
Not int the context of these amounts.
$20-ish to move 200k safely is nothing. If you are doing it internationally, it's typically tiny compared to the FX cost.
I’d be happier keeping the $25 tyvm.
Sure, write a personal check then and expect a lengthy hold. Or something else on the risk vs. PITA vs. cost framework.
Point is, wires are cheap for what they do. They aren't your only option, but all options have tradeoffs.
This is a debate between sending 4x ACHs over 4 days (presumably from the comfort of your own web browser) vs a wire (often requiring a visit or phone time).
right, and the trade off there is you may get flagged for structuring and locked out, right?
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.
What structuring? Both are way over mandatory SAR thresholds.
And risk getting your account frozen "for no reason", really smart.
$25 to move $50k in an atomic, irreversible way isn't a huge fee IMO. when you're dealing with that amount of money, the risk of it getting frozen or flagged for fraud is > $25. A lot of banks will let you send wires for free if you have a large enough balance.
Yes, but that involves talking to someone and waiting on hold. If there’s no rush, doing 4x ACH is easier, if you don’t know it’ll get you flagged. All I’m saying is banks need to be more prescriptive about telling you “we’ll put a hold on your account if you move large sums without telling us” rather than giving you some fake limit that actually utilizing will raise red flags. This is a common failure mode
I presume the argument some middle management type makes is that exposing their security protocols makes it trivial for a fraudster to work around. Obviously this is a fallacy because any genuine fraudsters has the incentive to work this all out by trial and error, if the information isn't freely available to them on some dark corner of the internet.
Trial and error takes time. Potentially a great deal of time. A motivated fraudster will likely get caught and stopped several times along the way if they're attacking a particular bank.
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.
Banks have an incentive to create as many roadblocks as possible to prevent you from transferring out large sums of money.
You may be surprised at how difficult the regulators make life for the banks.
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.
Interesting, thanks for sharing.
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.
They have those, lots of them. It doesn't matter if the regulator will take a stance like "we think (with the benefit of hindsight) it looked suspicious, so pay up". And unfortunately this is a very common thing for regulators to do. A lot of money laundering fines against big banks are like this. A civil servant comes in five years later after being handed some evidence that some transactions were criminal, says the bank should have known (without explaining how) and levies huge fines or gets a huge settlement.
Ouch. Marta literally answers a get-rich-quick ad, then installs a program that lets a fraudster remotely control her computer to send money to a bitcoin exchange account that was opened in her own name (requiring her own ID documents to do so), and then send the bitcoins onwards the "investing" platform.
> 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.
If you're the largest customer at a small bank they'll be happy to see you move it out because that much money can make them nervous.
Unless they're so small that you taking out your money results in them experiencing liquidity issues.
In which case they already have bigger problems.
That's the situation that makes them nervous.
In particular in the US, they are on the hook for almost all of it if the money was fraudulently moved out.
They'll try to dissuade you even if they know the transaction is legitimate.
You do a wire transfer.
Yes, my point is that banks don’t make it clear that maxing out their ACH quotas will get your account frozen and that you should do a wire transfer. You shouldn’t have to learn this the hard way by getting your account frozen (which is very stressful when it happens to you for the first time), and banks should make it clear what you should do, which is my point
It's a pretty niche problem though, so I guess not surprising they aren't great about communicating it (it probably was communicated, on page 30 of your agreement in small confusing text).
probably not communicated. Banks usually don't like to say: "your account will totally get frozen if you do this thing up to the limit of what we said you're allowed to do".
They like to keep the impression that account freezes are discretionary not automatic.
Ok with this context I understand what you are getting at.
Whenever I've been moving amounts at that scale, I've already had a close working relationship with my bank as a natural side-effect of my business activities. As a result, I'd be doing those sorts of transfers by talking to my account manager at the bank.
I suspect that's the norm that banks are expecting.
For which they kindly charge you a fee
schwab doesn't charge a fee to wire from a brokerage account. by the way, there's no minimum balance or fees required to open an account with them. you pick up the phone, get connected with an intelligent person who understands exactly how to help you, and wire the money. usually you don't even wait for an agent.
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.
Is that even "working around" the restriction? Surely moving 50k on each of 4 days is what you're expected to do in that case. It still means the maximum a fraudster can get away with is 50k if the fraud is discovered in one day.
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.
working around a restriction is called "Structuring" in the US:
This is not true. Structuring is much more narrowly defined, including in that Wikipedia article. It requires you to be working around a legal or regulatory reporting requirement.
No, you're expected to call and set up an appointment with a banker who can sell you on some kind of business account that has appropriate services for moving money in that way.
And yes, this will cost more and take more time than the spreading-it-out method.
no, this is too cynical. just give them a call, authenticate yourself, and they'll happily raise the limit for you.
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.
One of the reasons banks have these restrictions (besides the obvious thing of making it difficult to take large sums of money out because it hurts their business) is to prevent fraud. They want to prevent the case where some criminal gets physical access to my computer, or my login credentials, and drains my account without my knowledge. So they want you to initiate a manual verification that you really do intend to move such a large sum to prevent that fraud.
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.
So they want you to initiate a manual verification that you really do intend to move such a large sum to prevent that fraud.
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?
Part of the problem is a bank training you on recognizing that they have countless silly obscure rules for their own purposes - for example in what your password may be and how messages to their employees might be (mine limits the messages to be very short - no space to explain anything.) So you are quickly trained to make do with the silly rules. I.E. multiple ACH over several days and move on with your life... Or in the case of messages, I just continue my explanation in multiple messages.
Either way, the bank has trained the customer to work around limits. They can't have it both ways.
I.E. multiple ACH over several days and move on with your life...
Surely, just picking up the phone and speaking to them is faster and easier than engaging in structural transactions like that.
One, this isn’t structuring. Just because you read what structuring is 5m before you read my post doesn’t make this structuring. 50k is way over reporting limits.
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 didn't mean "structuring" in the legal sense, I meant it in the technical sense (arranging transactions in order to avoid something).
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.
Is it? Usually no, it's not. At one bank, they want me to always talk to the same person - who is generally competent but also usually not available and sometimes outright on vacation with no warning. At another bank, they want me to go through the basic 800 number - where the person who answers usually knows much less than I do. Picking up the phone is usually not a good solution.
And people are surprised why so many were excited to use cryptocurrencies. The current banking system is broken to the root.
And getting progressively more broken, due to increasingly stricter and more numerous laws, and more effective enforcement.
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.
"But they don’t tell you what they actually want you to do if you want to move 200k"
They will tell you to use a wire transfer.
There are some systems, banking for example, where "hacking" them and trying to be smarter than others can, and actually does, backfire.
Don't know where you live but where I leave this thing is pretty common when you are buying some property. The goal in this case should be pretty obvious.
Funny enough. Whenever possible, I round all my tips to cause the total to generate a particular two digit cents amount - so that I can easily detect fraud when I scan my statements. It’s my low tech error code check.
Has this ever turned up anything suspicious?
I track almost all of my expenditures. At a restaurant I used to visit fairly regularly I noticed that my costs were often off by approximately ±25 cents. This was inconsistent and not always in one party's favour. Upon reporting and investigation it turned out that (a) I routinely wrote 'math' along with a total instead of a tip and (b) one of the waiters only approximated the math required.
Nothing nefarious and I'm not even sure if I won or lost out of this - but it was interesting to catch.
I routinely wrote 'math'
Why would you do this?
1+ bottle wine?
I had to reread this because it didn't make sense to me the first time because it's so insane.
Not surprising, right? I don't know what you expected implicitly asking them to do the arithmetic for you, but I would've assumed not much care would be taken.
Writing both the tip and total adds redundancy which helps to avoid data entry mistakes.
I've heard that half the time a restarant's POS is configured to ask the waiter to enter the number written on the tip line, but the other half of the time, it's configured for the them to enter what's written on the total line. Meaning, in the first case, writing "math" means more work for the waiter, and in the latter case, you better be careful the amount you wrote on the total line is accurate.
Catch what? Why would you do something so silly
I routinely wrote 'math' along with a total instead of a tip
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.
It actually did. At a wings place I noticed a total that wasn’t my usual last two digits. I called up the place and they confirmed they had an employee who had been altering tip amounts and also skimming cards. They advised me to call my credit card company and ask for a new card. It is now a well defined muscle memory for me. Therefore for very little effort I get a desirable side effect of easy detection. My teen son currently rolls his eyes when I fill out the receipt but I suspect he’ll adopt the habit in some form over time.
What about routine credit card transactions that you don’t tip on? Isn’t that the bulk of purchases ?
Transactions that don't involve latency in knowing the final amount also don't offer the same opportunity for chicanery.
He's the guy that tips at grocery stores.
I get a notification on my phone when any money is deposited or withdrawn from my account. If its not something I've just done or an unexpected amount, then its probably fraud and I can tell my bank.
In the US, restaurants immediately charge the price of the meal (without tip). Then the next day the restaurant updates the amount of the original charge to add on the amount you added as a tip.
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)
It works that way because in the 1980s that was the only way to make it work at all, and it still works that way because being able to do the equivalent of an HTTP OPTIONS preflight for money is actually quite useful.
A restaurant could ask for the tip before charging the card.
That's how it works in Europe.
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.
In the US, it'd be considered déclassé in most sit-down restaurants for the customer to run their own card. You see it at fast food and "fast casual" places, but not really anywhere fancier; to a good first approximation you can quickly understand in which market segment a restaurant would like you to perceive it by how easy or difficult it is to see any point-of-sale equipment from anywhere in the dining area.
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.
In the US, it'd be considered déclassé in most sit-down restaurants for the customer to run their own card.
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.
Okay. Now:
- 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.
Is it 69?
It's 69.
My guess is 42.
I use palindromes. Easy to check and will catch extra dollars added.
I've also heard repeatedly in conversation people frequently admit to structuring financial transactions for a variety of reasons, completely unaware that doing so is a felony.
Is it illegal to round up your transaction to $10,001 for the purpose of making the bank file the form so you can't be accused of structuring to avoid it?
Does the bank have a human look at / file the form, or is it automatically generated? (Unless they are required to do it manually, I can't imagine they do)
(the problem with these ideas is that they make you responsible for knowing all these things - which ideally is what you pay the bank for.)
lol, no. Why would it be?
Sorry, what does "structuring financial transactions" mean in this context?
It’s only illegal if you’re intentionally doing it to avoid reporting
They are intentionally doing it because of mostly imagined consequences of having the transactions be reported. And committing a felony as a consequence.
Anecdote: I hade my Revolut account suspended for 24 hours for a reason they refused to disclose yet admitted as their mistake last week
The solution is simple: Stop "banking" with entities that don't have a banking license.
Revolut has a banking license, at least in Europe
Sometimes you don’t get a choice, especially when only just moving to a new country.
Anecdata, but I've had both my bank account and Stripe account closed for basically "no reason".
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.
You seem very emotionally invested in the idea that banks don't make mistakes. What is that all about?
I’m pretty sure that they absolutely know that banks make mistakes.
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.
The only way to get any assurance about staying out of trouble with your bank is to have enough money that they start to not care so much about the risk of doing business with you, and to pay a lot of money to an expert to do the AML compliance for you.
The other way is to communicate with the bank. Talk to them. If you're doing something involving a large amount of money, or something unusual for you, call them up, tell them what you're doing and ask for their help.
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.
This is a woefully naive position. Unusual activity on your account is an easy way to get a SAR. Calling up to check whether you’ll get a SAR is an even easier way to get a SAR.
It's always worked very well for me for decades.
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.
This is a little victim blamey. Banks mess up all the time. Regressive policies in capitalist institutions are extremely common. Incompetence is common. Negative action in service of the profit incentive is common.
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.
The people moving money to blacklisted places aren't opening Bank of America checking accounts.
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.
CTRs are required for $10,000+. Structuring is more like if you're depositing $9,999, which is kind of the opposite of a round number.
It would also be two deposits of $5k or 10 $1k deposits, etc.
I'm ready to believe this, but IIRC on previous posts people accused the poster of doing shady things but I don't remember seeing it ever coming out that they actually did. Do you have some links?
but eventually it comes out that they’re in North Korea selling cannabis to Iran or something.
I only do this on the occasional Wednesday though when things are quiet at work
Yes, individuals are allowed to have a public forum for that. We have freedom of speech after all.
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.
Anti-Money Laundering laws are a complete anti-democratic tyranny. With AML you are assumed guilty anytime you possess money, or participate in any financial transactions, or have any assets. If called upon to do so you will have to prove your innocence beyond a reasonable doubt, and if you fail to do so, your assets or money can be permanently seized. All of this occurs without any form of due process.
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.
> Anti-Money Laundering laws are a complete anti-democratic tyranny.
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.
There's no evidence that representatives do what constituents want them to do. In fact, there's evidence they do what billionaires want them to do.
> There's no evidence that representatives do what constituents want them to do.
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.
No, that doesn't measure that they are doing what we want them to do. That measures how effectively they can convince us that the other candidate would be worse, so you should vote for the lesser evil.
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.
> that doesn't measure that they are doing what we want them to do. That measures how effectively they can convince us that the other candidate would be worse
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.
It's actually the range of policies that we won't literally riot about if they push on us.
No, that we won't vote them out of office (or refuse to vote them into office) about. Which is functionally equivalent to "accept".
Voting them out of office doesn't matter. Their opponent supports the same policies.
On most topics, there is NO candidate who is for doing things outside of the current Overton window.
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.)
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.
> This is an artifact of the districting system.
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.
The fact that people given a choice between "abortion is illegal" or "poors don't starve to death" choose "abortion is illegal" doesn't mean they want poors to starve to death (although they do want that); it just means they want abortion to be illegal more.
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.
> given a choice between "abortion is illegal" or "poors don't starve to death"
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.
You implied that the majority of voters want Something To Be Done and so keep reelecting the people who do this. In fact what happens is that the majority of voters don't even know that this issue exists, but some interest group wants it and captures a representative whose district isn't going to notice or care what their representative is doing on this and then trades votes on other issues their district also doesn't care about to get what they want from other representatives.
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.
Mostly we vote based on our personal biggest issue, no matter what they do on the other issues. A lot of Republicans vote Republican because they claim to hate abortion, and they literally don't care about the rest.
Wether or not laws and policies have, in practice, anything to do with what people want, is still up for debate [1] [2].
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-...
> Wether or not laws and policies have, in practice, anything to do with what people want, is still up for debate
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.
Individual House Representatives usually have high approval ratings from people who voted them in while Congress as a whole has a terrible approval rating. It's not quite as simple as seeing historical election results and saying everybody is necessarily happy with their representation.
> Individual House Representatives usually have high approval ratings from people who voted them in while Congress as a whole has a terrible approval rating.
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.
> Individual House Representatives usually have high approval ratings from people who voted them in while Congress as a whole has a terrible approval rating.
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.
> 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.
Sure.
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.
Yes and no.
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.
Nonsense. It’s entirely possible for tyrannical laws to become self-sustaining by applying them for political purposes.
Just a reminder- modern democracies are a set of democratic institutions such as civil service, independent courts, free media, and some elected representatives. Rule by the people has not meant democracy for over a hundred years.
and law-abiding wealthy people who naively think they’re entitled to possess their own money.
They should be fine as long as they show receipts.
I really hope this is a joke lol. The amount of paperwork required today is far in excess of anything required pre-GFC. Basically any wealth acquired prior to then is up for confiscation, and this happens all the time. But again, nobody cares, because injustices delivered upon the rich are fine. Imagine you inherited a property from your parents, how do you imagine you’d be able to prove the provenance of that asset? Or the cash used to buy it/pay the mortgage on it? You can’t.
If you inherited it (at least in the US) there will be probate records. And property transfer records. There's LOTS of documentation for that sort of thing.
Records that you inherited it are not enough. Where are the records that your parents acquired it properly? Where are the records that prove the money they used to acquire the house were acquired properly? This is the trouble with a presumption of guilt, proving these things are basically impossible.
No. Probate records that you inherited it are enough to get property transferred to your name and the title recorded as such. If you want to be covered just in case your parents somehow stole the land and falsified their ownership, title insurance is a thing.
None of this is impossible. None of this is unknowable. This all happens everyday.
The problem (this time) isn't that they try to deny your title to the property, it's that you sell the property and they freeze your account with the money in it and now the burden is on you to prove that your parents acquired it lawfully, which you have no way to do because it happened many years ago and your parents have passed away.
No. If you have title, it's presumed that the land has been lawfully transferred. If someone/.gov wants to claim otherwise, they need to prove that. The entire mortgage market is predicated on that. Can someone cite an instance where someone who "inherited property had to prove their parents acquired it legally because their funds were frozen after a sale" because I'd be very interested in seeing that. I'd be a LOT more willing to believe that a sale fell through because the BUYERS couldn't verify the parent's title, but that's not what's described here.
Do buyers here not do a title exam?
It's not the title which is the issue. You transferred the title and received the money and then the bank took the money. The buyer still has the title and doesn't care about you anymore, and you have no claim to get it back because they actually paid you. But then the bank stole the money they paid you because you couldn't prove how you got the title to begin with.
Imagine you inherited a property from your parents, how do you imagine you’d be able to prove the provenance of that asset? Or the cash used to buy it/pay the mortgage on it? You can’t.
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.
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
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 assure you, rich people care very deeply about having their money taken away, and are, as a class, incredibly litigious, and are often politically connected.
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.
To be fair:
“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
We have freedom of speech after all.
You don't, though.
The US does. Most countries don't.
The US doesn't have free speech. It just deluded itself into thinking its version of unfree speech is either somehow not speech, or just doesn't count for some dumb reason or another. There are many things you can't say in the USA.
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.
The US doesn't have free speech.
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.
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).
Please, go to your local town square and hand out flyers about your plot to assassinate the President. Report back with your results.
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.
Ideological purity may wish otherwise, but there’s a meta-layer here: there are inevitable limits to “free speech” when said speech genuinely threatens the institution that otherwise allows free speech.
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.
You are not free to earnestly threaten president or call others to do so.
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.
Calls to action are speech. When I open my mouth and words come out of it, that is speech. When I punch you in the face, that is not speech. When I tell someone else to punch you in the face, that is speech. When he punches you, that is not speech. I don't know how much simpler I can make it.
If I'm not free to tell someone to punch you in the face, then I don't have absolute free speech.
Calls to action are 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?
People like that often don't get arrested. At most the Secret Service will take note and make them stay home if there's a VIP anywhere nearby.
There's lots of crazy people and we don't keep them in prisons anymore.
It's not very free if you can get confined to your house for saying it.
All democracies do, one way or the other.
Plenty of democracies with weak or highly overridable constitutions.
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.
Every country is like that, including the USA.
No it's not, as evidence by the numerous laws struck down by the Supreme Court.
The laws don't mean anything if you get arrested anyway.
Sure they do because you’re released.
Not to anywhere near the same extent. Meaning, not when it matters.
Freedom of speech almost never meant and never will mean to be able to speak whatever you want to whoever you want wherever you want whenever you want. No matter what propaganda tells. There are limits and will be limits, and except anarchists nobody can say that this is what they really want in good faith. We know as a fact that uncontrolled free speech is harmful.
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.
Freedom of speech almost never meant and never will mean to be able to speak whatever you want to whoever you want wherever you want whenever you want
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.
Freedom of speech almost never meant and never will mean to be able to speak whatever you want to whoever you want wherever you want whenever you want That is quite literally what it means.
> 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.
So you acknowledge that freedom of speech is a platonic ideal, which the USA doesn't have.
So are you saying that nobody wants free speech (except anarchists as I mentioned)?
I don't care how many people want free speech. That is completely irrelevant. You are the one defending that the USA has it.
It matters because if the USA doesn’t have it because of your reasoning, then all of those people lied.
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.
That is quite literally what it means
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.
Sticks and stones can break my bones, but speech rarely infringes on my constitutional rights.
It didn’t mean that in Ancient Greece because whoever used that idea didn’t thought that slaves were humans, it didn’t mean that in Middle Ages because everybody who used that used it for specific locations or forms, and it definitely doesn’t mean that since Mill, because nobody use that without including some level of harm principle under an asterisk.
The exceptions are as old as the idea itself. The retcon is thinking otherwise.
IMO AML should be abolished because it is ineffective, inefficient and nothing would effectively change if removed. It recovers 100x less than its compliance cost. It’s the TSA of banking, it’s motion without progress.
https://content.11fs.com/article/aml-is-the-worlds-most-inef...
The question isn't how much crime it catches. It is how much crime it prevents in the first place.
(No, I'm not suggesting that I have an answer to that question. Just that you're measuring by the wrong measuring stick.)
How much crime it catches is directly related to how much crime it could prevent. If the measure is totally ineffective and criminals hardly ever get caught then there is no deterrent.
This is clearly not true. Why else do organizations involved in large scale ML move to locations with more lax AML regimes? E.g. crypto in eastern Europe. If the risk of being caught was no deterrent, ML activity would be dependent on 'amount of launderable funds' and independent of AML regime - can you offer an argument showing this is true?
E.g. crypto in eastern Europe.
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.
One of the reasons it's so ineffective is that you can move to jurisdictions with different laws (or corrupt governments), so the law only negatively impacts innocent people in your own country, meanwhile criminals have stable alternatives.
The absolute magnitude of crime it catches is completely irrelevant. The earlier poster is incorrect saying is useless because
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.
It's not actually that difficult to know, you can look it up. It isn't 90% effective, or 10%, but rather 0.2% effective.
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.
How much crime it catches is directly related to how much crime it could prevent.
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.
Proportionality doesn't have to be linear, and in this case it's unlikely to be, but in the way that makes the AML rules even more worthless.
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.
It really isn't so simple. My views on this are informed by https://www.bitsaboutmoney.com/archive/money-laundering-and-..., so you might want to read that.
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.
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.
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.
Thing is, if you’re laundering money, you’re probably doing something incredibly profitable (importing kilos of something that cost you $2k and then selling for $20k, or just straight up stolen funds with no cost basis).
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”.
That's overly simplistic. AML laws serve more purposes than simply catching money laundering, they discourage the underlying crime in the first place. Discouraging that can't be counted, yet you are saying is "AML doesn't catch anything!" But you can't prove the negative.
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
I think it's pretty clear by now that "anti money laundering" is just the financial arm of warrantless global mass surveillance. Money laundering may be a crime but it does not justify this. "Monitoring" people and punishing them because they "might" be some money launderer or terrorist is completely backwards and should be a violation of basic rights.
What can be done as an ordinary people to abolish this system? I firmly believe these types of systems are gross violations of the 1st amendment
There isn't a 1st amendment for international banking; that's what international means.
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.
One could argue that cryptocurrencies solve these issues (while creating some of their own).
Oh, they've got the same abuse problems, especially if you try to start a company over them. In fact, with flash loans they managed to invent all new kinds of them!
There's no hope of ever abolishing such a thing. Our only hope is to subvert it with technology. Cryptocurrency and self-custody. Monero seems like the best option.
As the Nobel laureate, economist F.A. Hayek said in 1984 - take the money out of the hands of the government using some sly or roundabout way.
When I worked at google they made all the devs in my team take the anti-money-laundering class. It was pretty basic stuff like "don't carry a suitcase full of cash across international boundaries". I remember everyone was amazed that I passed the test. And it must have been suspicious ;-)
Amazon had a similar class, with nice helpful tips like "pay bribes in untraceable cash, not via bank transfers".
The best part about all this is you explain what a SAR is to nearly anyone for the first time, and their immediate response nearly 100% of the time is to suggest committing an actual felony by structuring to avoid them.
Even if there is literally no crime to hide.
Yes, most of the time people worry about CTRs when they try to withdraw or deposit in an amount more than $10K in one transaction. So, people go around to avoid CTRs. CTRs are never a problem: for every SAR, 10+ CTRs are filed.
In other words, people exacerbate the problem by 10 times.
If you know about SAR, you know that banks can't share information about them or their criteria with the account holder. So the only reason to mention it is if you are angling to bribe an employee to break the rules.
It is possible (and likely quite common) for a layman to only have partial knowledge of how SARs work.
Effectively, its all just based on what indicators have a sufficient signal-to-noise ratio. If the signal-to-noise is high enough for any detectable behavior, then it can become a SAR.
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.
Currency Transaction Reports(CTRs) are strictly dollar-driven: if someone deposits/withdraws an amount over $10K in a single transaction, CTR is filed automatically. However, if you Zelle to X for a few times, and this X seems to receive too many Zelle payments, both you and X (assuming both have accounts at the same bank) can be reported through SARs with "this transaction has no apparent economic, business or lawful purpose."
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".
In a world where being connected to the global financial system is an existential question, the lack of transparency and accountability for these hostile practices does seem to violate the spirit of due process.
I'd wager the reason a lot of bank systems suck is that them sucking doesn't matter to the banks, and the suck can be even beneficial to them.
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.
When you have literally a license to create money out of thin air
Well, you can loan out some amount of money that you don't have, hopefully get it returned to you with some interest.
If enough doesn't get returned, the gov/centeral bank gives it to you as a bailout. And for many loans you automatically get it from the gov if the debtor can't pay.
If enough doesn't get returned, the gov/centeral bank gives it to you as a bailout.
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.
Citibank was bailed out, the stock rose over 50% overnight and the CEO got paid hundreds of millions.
Citibank shareholders got diluted, and Citibank paid back for that bailout, with the taxpayers profiting ~12 billion in total.
If the money couldn't have been paid back, the shareholders wouldn't have been diluted.
They would have been wiped out.
If the gov wouldn't have bailed out Citibank the shareholders would have been wiped out in the first place. And gov would have gotten it for essentially free if wanted. It was not like they saw that here's a great investment opportunity to make profit for taxpayers.
If the gov wouldn't have bailed out Citibank the shareholders would have been wiped out in the first place.
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.
You realize bailouts are loans, right? They aren't just free money.
There were many forms of bailout for Citibank (and others). Some were (extremely favorably termed) loans, some government backing of their bad assets and some were buying stock that the market didn't want to touch.
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.
No, that's not how it works. They did this a few times, even a few high-profile cases, but the vast majority of times they just gave money to the struggling bank.
That money comes from the FDIC insurance fund, which comes from other banks. It's not printed or coming from taxpayers.
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.
I want to make it a point that EVERYONE CAN DO THIS. Everyone can make a loan, everyone can count their un-returned loans as money if they want to, and everyone can accept transfers of other people's un-returned loans as payment if they want to. The only special power banks have is that most people accept them doing this. If your whole friend circle accepts un-returned loans from each other as payment, then you're all doing fractional reserve.
The special power is the banking license they get from the government. Try to do it without and you'll find yourself in prison quite soon. Especially if you do it in official currency.
No, I don't need a banking license to loan my friend $10.
The difference is that licensed and regulated banks can scale it. Retail customers can trust them due to their long-standing reputation, their banking licence and linked to that, the FDIC insurance.
That's not how it works. When a bank makes a loan, the customer will use it to buy something (say, a house), and probably the money will be put in a different bank. So the money definitely needs to be there, to pay the other bank.
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.
When you have literally a license to create money out of thin air
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
Yes, but when I deposit $100 with @Bank (ie, effectively lending $100 to the bank), they aren't loaning out $10 to a couple people, they're lending out $100 to a couple people, because they did the math and figured that they can get most of those people to pay them back before I ask them for my $100 back. This is all well and good, but they really are creating money out of thin air when they're loaning out more money than they actually have on hand.
This makes no sense. If the bank lends $100 each to two people, it has to be prepared for them to take that money and spend it more or less immediately - on a house, or payroll, or whatever. When you put your $100 into the ATM, and two people get $100 bills from the ATM, where does the second bill come from?
The bank lends an amount at 7%. The individual immediately pays the full amount into someone else's bank account. If the bank needs cash (which it probably doesn't on a day to day basis because most of its depositors leave money where it is) it can borrow that amount from the other bank at 5.5% and profit from the margin. So the amounts are eventually consistent.
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.
Only something like 10% of the world's money are physical bills and coins. The rest is electronic, just numbers in reputable databases.
The bank can rely on this fact. It only needs enough notes to support a likely amount of physical cash withdrawals each day.
There are no fractional reserve requirements anymore. And (almost) all money is debt anyway, even by definition with some definitions.
"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
There are lots of reserve and stress testing requirements on banks, and banks are usually public companies whose finances their investors can read, and they often fail when the investors decide the finances look bad.
There are, but the lack of reserve requirements make the widespread idea that banks are lending other people's deposits out is even more wrong.
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.
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.
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.
I mean't that you can't change the bank and keep your old account number. IBAN is just the "Finnish" number with FI prefixed and check digits appended. Though probably the old numbers too have per-bank allocated prefixes. BIC identifies the bank.
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?
The point is that in your proposed system in which the customer keeps their local bank account number when moving banks, there will still be places where the customer will have to change their number - i.e. everywhere where their IBAN is stored. The IBAN cannot remain the same, because international institutions need to know which institutions they are dealing with. Not all institutions are legally allowed to or want to transact with all institutions.
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.
You mean universally/internationally agreed protocol and maybe a set of laws like e.g. IBAN?
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?
Of course the IBAN system can be changed. It will just require a revision of international treaties, which will require dozens of countries agreeing to it. Finland has little control there.
Can't Finland register the whole FI prefix as institution "Finland"? If other countries' institutions need to know the actual institution, well... it wouldn't be the first time two countries had conflicting requirements, and politicians had to get together and yell at each other a bunch and suddenly a law was passed to solve it.
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.
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?
May depend on the country, but at least in Finland the account numbers have been unique across banks for ages. The first part refers to the bank (actually a branch at least back in the day) and the last part to the account within the bank. There was and is no need to specify the bank separately.
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.
In The Netherlands there is an interbank "bank transfer" service (https://www.overstapservice.nl/, Dutch) where if you move to another bank, your old one wil automatically forward transfers and debits still arriving at your old account to the new one. Also the new bank can notify companies about your new account, and these companies will change your account number in their systems.
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.
Former chairman and a major owner of Finland's largest private bank, and essentially a real life Gordon Gekko, literally said that ordinary customers bring only the sand from their soles to banks.
And that's probably getting truer by the day when they don't need even fractional reserves to just create money.
Patio11 is the best resource that I'm aware of to understand how our institutional world works. And its biases. Over and over again it is built in a way that incentivizes some behaviors, and doesn't incentivize others. One behavior that is always incentivized is that the professional and managerial classes should always have prioritized access.
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.
It's absolutely great how @patio11 managed to recreate exactly the same system within stripe despite being fully aware of it.
(I save up my karma points precisely so I can burn them on comments like this.)
My impression of what he wrote is that it's an explanation of the status quo, not a denunciation of it. In his conclusion:
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.
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.
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.
People call it "premuim banking", and it's a widely popular thing that costs not that much
I’ve been having a fun ride reading “QualityLand” [0] .
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...
This sounds like effectively the same premise as Doctorow's Down and Out in the Magic Kingdom.
The problems with tiered support are back to where all problems come from. Humans.
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.
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
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?
Human organizations are, strangely enough, natural systems, which are notoriously hard to control without making them worse. It's one thing to know how a beaver dam works; it's another to muck about with the river hoping to come up with a better dam.
Seriously someone should create Kubernetes - but for company-building.
what he do?
This was my thought. This write-up is for understanding a system not to fix it, but to abuse it and profit from it. It's sort of black hat in a way.
Are you confusing Patrick Collison, who cofounded Stripe, with Patrick McKenzie, who joined years later to work on documentation?
I'm not sure which part you are referring to by "exactly the same system", or to what extent patio11 is personally responsible for it.
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".
I've found these blog posts of his to be like Moldbug's - compelling in a way, consisting mostly of true statements, but also trying to aggressively push a very particular worldview on you. I would advise mixing him with other sources and taking care to be sceptical.
It's very verbose and self assured. You might enjoy it the first few times but I don't anymore.
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.
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?
Tangential: the lead picture in the article linked in this comment immediately came across as AI generated, whereas the one in OP's article did not: I had to go back and look at it again to realise that it too is AI generated. It is quite complex, similar to the human drawn abstract art one might find in an Atlantic or Wired or New Yorker article, the garbled text nearly the only thing giving it away. The article in the comment is from August 2023, so the difference in quality represents only a few months of progress (DALL-E 3?).
Or maybe they're from the same source, and the author just chose different aesthetics for the different articles. Quite nice, in any case.
I also love Patio11's writing - but the formal thinking in this space is generally within the bountiful sub-disciplines that exist between and within Anthropology and Sociology. James C. Scott is, among other things, an Anthropologist[1].
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).
patio11 is the best resource that I'm aware of to understand how our institutional world works.
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.
agreed, he has a great piece on japans system
I watched senior engineering leadership ask senior Ops leadership why they had never been asked to fix them. Ops replied that their long experience in the financial industry had taught them that Ops never gets to use software which isn’t broken and that complaining about this is like complaining about gravity.
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!
I work with banks on, um issues, without disclosing too much. Occasionally we find issues with their software workflows, and this isn't related directly to monetary stuff. We're not allowed to have the end result change in any way most of the time. "But we're getting a wrong answer", or "This is costing XX person hours per day" isn't up for consideration. Nothing must change.
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.
Encountered a challenge like this once. Infrastructure team kept telling us it wasn't anything on their end. I coordinated with the business unit VP to serve their entire QA environment from four VM's on my laptop for a day, and performance went from slow as molasses, to purring like a kitten. A couple days later their infrastructure team finally identified storage latency issues on their multi-million dollar cluster and let me help them fix it.
I swear IOPS/request latency is one of the least understood things in these huge companies. "But we have 40bazillion GB and 100GB LAN", cool story bro, your disk queue latency is pegged at your depth limit and your fs response latency is over a second, everything is going to suck till you deal with that.
your disk queue latency is pegged at your depth limit and your fs response latency is over a second
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.
Basically, "the disk is always terribly busy with tiny data operations".
I have had customers say this when not getting desired throughput cross-continent. "But the pipes! They are fat!" Yes but also your window needs to scale... 6 figure network engineers not knowing about window scaling, who do not know how to analyze a packet trace.
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!
Oh, this is too common! I can't even count how many times I had to blame Einstein for setting the speed of light too low in his law. (Nitpick: I know he's the wrong person to blame, but he's famous enough to make this joke understandable by everybody)
Once I had to write a root cause analysis report and it basically explained how TCP works.
Truth. I literally have a signal on one of my monitoring dashboards which indicates "database is currently undergoing online backup", because it is the single most important performance signal I have. This doesn't come to me as a signal from the database team; I have to poll the database for it myself.
Noisy neighbor in inadequately-isolated, shared-tenancy models is just the worst.
I find it very hard to tolerate teams that say an issue isn't on them if they aren't pointing to evidence that indicates where they think the issue is. If you think it's not on you but it affects something within your responsibility, you're still on the hook until you prove it.
Nothing more fun than troubleshooting a fax machine incompatibility.
“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 work with banks on, um issues, without disclosing too much. Occasionally we find issues with their software workflows, and this isn't related directly to monetary stuff. We're not allowed to have the end result change in any way most of the time.
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?!"
A while back I worked at a digital media company. For developers, the process of setting up ads for new mini sites was a big pain and required lots of back and forth and approvals with Ads team. I asked other developers, and they say "This is just the process that tyhe Ads team needs".
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.
Congratulations - you just became a Sr Product Manager!
This is why I believe it's critical to occasionally rotate people into a different team for a few weeks to a month. Every time I've seen it happen, there are subtle things learned which can lead to big improvements. It's not a magic bullet, but it's much more likely to lead to discovering things nobody knew than if everybody stays in place forever.
Don't get me started. I've seen many cases where one PHP page doing one occasional SQL query against one prod database, could drive massive efficiency improvements in the organization. In a minority of these cases, I was allowed to do such a thing.
On a previous team every eng would shadow and Ops person for a day, once a year. We fixed so much stuff.
I moved to a role supporting a team that had been told that huge numbers of things were "impossible" by a brilliant guy given to migraines. If you asked him on a good day, he could do anything. But on a bad day he just wanted you out of his office. By his demonstrated competence, they took what he said as gospel.
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 sounds like the psychology of "Learned Helplessness" [0] among employees and teams.
It is really hard to train people to not put up with chronic pain in their workflows!
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.
A lot of the times, the 'correct' workflow isn't even documented enough to recreate it.
Often not even enough to identify that there ever was one in the first place.
And now you wonder why wanted crypto to succeed. It was not because it was quick way to make money: It was so that banks had to compete with real technology and so that no one ever had to have their lives savings stolen by bankers with no recurse.
The story of crypto is the story of recreating the existing financial system from scratch, particularly including all its regulations that make the current modern financial system so annoying. Yes, the current financial regulations suck, but each one was put into place because of failures like you see in crypto every day. In the long run cyrpto regulation will wind up looking much like modern financial regulation because it suffers from the same pressures, incentives, and attack surfaces as the modern financial system. This isn't to say that the current financial regulation regime is good in any sense of the word, just that it's effective at what it's explicitly designed to respond to. Crypto that lacks the regulation of modern finance will suffer from one set of problems; modern financial regulation suffers from another set of problems emergent from the system of regulation itself. That crypto doesn't suffer from problems caused by the system of regulations does not make it inherently better than modern finance
Cryptocurrencies had two main goals
- 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.
Let individuals freely transact. Which as you rightly point out, has failed for good reasons.
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.
Of course, X can send Y cryptocurrency, and Y will receive it.
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.
A government prohibiting crypto and/or making it impractical to access isn't evidence of the technology's failure.
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_...
States have been actively shutting down p2p fiat to crypto trades, but they cannot shut down all of them. Currently if you don’t have an exchange account, the most popular platform is Bisq for secure p2p fiat/crypto trades. And if you’re more oldschool there’s always localmonero or irc.
I disagree with your first point, Bitcoin let has let individual transact freely for a decade now. Sure, it has a hard time scaling but apart from that I think it's doing great on this point. Could you detail what you had in mind if you disagree ?
There are fraud prevention institutions out there who secretly colour your coins and won't let you deposit to an exchange (or trigger some very intensive verification and a police report) if you try to deposit certain coins.
That's true, but there's ongoing work about this to add some kind of plausible deniability to all transactions. There's also privacy coins like Monero where this problem has been solved already. Many institutions then banned Monero, but they won't be able to ban all cryptocurrencies if they get on par with Monero's privacy protecting techniques.
Let individuals freely transact. Which as you rightly point out, has failed for good reasons.
How has this failed? Every month I transact in crypto while I could not do the same using traditional methods.
so that no one ever had to have their lives savings stolen by bankers with no recurse.
This is meant sarcastically, right? Crypto is extremely efficient at causing people's life savings to evaporate
Sure but only by their actions, not by the actions of some stupid mainframe software.
The Forex is equally extremely efficient at vaporising life savings, still you wouldn't say that's the fault of the dollar/euro/yen/yuan/dinar/...
Not by bankers, so it's all good. I will say, PancakeSwap stole a trivial amount of my money, and probably more of other people's. Are they bankers?
And yet cryptocurrency managed to recreate its own equally complicated messes! E.g. lightning network, bridge tokens, swap routers, parachains.
It turns out that scalable distributed systems are really hard, and scalable secure distributed systems are even harder - who knew.
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.
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.
a system that calls you back is better than a system you wait on hold for
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.
There is also no recourse when you never get called back. Better to just leave the call on hold until a human appears.
What is the recourse if nobody picks up the hold?
Or, as has happened more times than I can count, someone picks up and then the line goes dead?
In both those cases you know something happened. If they never pick up - at least you know when you gave up. If they hang up you know and can restart. Both are bad, but better than wondering if you are forgotten.
Or the waiting for an hour listening to hold music happens on your lunch break, whereas the callback inevitably takes place when you're in a meeting or driving...
It depends on where you live. In my country I would never take a call from a bank at face value and would always expect they give me a phone number to call back, and that better be an institutional number. Phone fraud is rampant.
Which in turn depends on where you live: some places a call is not ended until both sides hang up. Fraudsters use that to call you, give you a number and then when you call back pretend to be answering the phone (complete with ring noises).
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)
some places a call is not ended until both sides hang up. Fraudsters use that to call you, give you a number and then when you call back pretend to be answering the phone (complete with ring noises).
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!
It's a landline thing. It used to be the case on analogue lines in the UK that the caller controlled the connection (probably because they were the ones being billed for it and the recipients phone couldn't communicate it's time to stop the bill).
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.
It isn't completely insane. in the days of landlines it makes sense because you can hang up the phone and go to a different - more comfortable - room when you realize the conversation will take longer. I don't think cell phones have ever had this anywhere.
I am not really convinced of Patrick's framing of the supposedly inevitable trade-offs. I've lived in other countries with credit cards and discount brokerages, and in my opinion, the U.S. is uniquely bad at servicing customers.
The book Seeing Like a State referenced in the article is an amazing read:
https://www.amazon.com/Seeing-like-State-Certain-Condition/d...
Highly recommend, though glance at summary to confirm you'll enjoy / benefit:
It would be cool to map the relationship between a book getting linked on HN and its checkout rate at the local public library. That's usually the first place I head when I see something I want to read on here.
Your local library has a much better offering of niche non-fiction than mine. Many of the texts I see here aren't even available through my school's cross country academic network. I did read this book that way, but I had to wait for it to come quite a distance.
My city's newest library is an art piece with less books than any other here, to be fair.
one of the great books on understanding corporate management too.
I've heard alot of great reviews of this book but personally found it pretty disappointing.
ty bought it
Currently reading this book and was wondering if the title was a reference. Gonna read the article now.
It's a great book but one sided in its analysis. I'd recommend pairing it with a book about a case where High Modernism worked great, like The Ghost Map or something.
and if you want some rather funny videos on this topic: https://www.youtube.com/results?search_query=reasontv+uninte...
TL/DR: We look like idiots, but it's not our fault because:
(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.
The simple answer is:
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.
Funny thing: local banks and credit unions pulled it off for a century or so, albeit sometimes with account fees.
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.
Service workers are incredibly more expensive than they were "a century ago" because of productivity increases and Baumol. You can't have a housemaid or a gas station attendant either.
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.
Sorry, but that’s nonsense.
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)
Local banks and credit unions still do it, competently enough to earn very high satisfaction ratings from their customers/members.
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?
If they were popular with their customers they wouldn't be small banks, they'd be big banks.
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.
What? That’s not how businesses work. Businesses don’t grow indefinitely, they size themselves to fit an underserved niche.
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?
It is illegal for a company to lie to its investors, so it's usually illegal to lie to the public too.
Who's talking about lying anyway? Not answering a question about SARs is not lying.
There should be more of this. Much more. From different angles and view points but with the same clarity and directness.
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.
what is the purpose of banking and bankers.
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.
And the purpose of this is to increase money velocity by providing loans. "Narrow banking" (having the government provide bank accounts) wouldn't work unless the government also provided business loans, which doesn't really make sense.
Any references to narrow banking been tried and "not working"?
Separating the issue of private money from providing commercial credit risk insurance (ala CDS) should be possible.
The Fed won't give you a license to operate a narrow bank. It's been tried; they said it would make private banks insufficiently capitalized.
Thats a rather incomplete business model description of banking.
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.
The purpose of banking is to allow people to store their money safely. It is not to allow finance bros to gamble with customer deposits without consent.
My very very naive take on this: why don't banks have more common operating systems and data structures? Why is it this hard for acquisitions to work? They're a guaranteed part of business so a common software stack could help Chase integrate First Republic without two parallel systems? (I welcome any responses on why this will never happen though!)
Every problem you solve takes time away from solving other problems, and this one is a particularly difficult coordination problem with very little payoff.
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.
Bank transfers take days to complete because of liquidity management, not due to IT system delays. When you do a big enough transfer, the bank has to have a balance with the central bank that can be moved to the target bank's CB account, but, your bank doesn't actually have the money you deposited. It's out on loan instead. So the bank has to go into the market and sell some assets to raise that money. It may not be possible to do this immediately, and even if it is, they want to be able to time their sales to reduce capital inefficiencies.
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.
There is a famous joke about standards: the great thing about common standards is that you have so many to choose from. A corollary to it: if none of the existing common standards meets your need, how about letting some of your senior staff get promoted by successfully creating and popularizing a new common standard?
My two cents from the perspective of smaller financial institutions - cores do not care about making it easier for you to move off of them. They probably wouldn’t mind making it easier to move on, but core conversions are such a nightmare that they have dedicated onboarding teams for this with lots of tooling and knowledge, and since everyone else’s data structures are different, there’s no point standardizing your own.
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.
Pick any two small businesses in the same niche. Grow them for three or four decades. How identical do you think their evolved business practices will be?
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.
Why don't software companies have more common operating systems and data structures? Why is it hard for acquisitions of software companies to work? They are a common part of business in that industry too.
There is something about this that I'd like to be able to communicate better [0]:
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.
Large organizations are made of "money saving entities".
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".
Large organizations are made of "money saving entities".
Working for a cost center vs. a profit center will make a huge difference in your professional life.
Not everyone is wired for a sales&marketing job, and twisting themselves to fit in that role would also make a huge difference in life, in a more Faustian kind of way.
There are companies that don't view Development work as the "cost" center for the business, but much more directly as the "Profit" center of the business. This is not necessarily the norm, and certainly not in certain industries like Education or especially Hospitals, or Law where IT are basically seen as second class citizens (however well they may be compensated).
I feel it's very much not the norm, except for early-stage tech startups, and companies that use software directly to print money - which more often than I'd like means adtech or gambling. All the "useful" or "worthwhile" activities, in the traditional, social sense, tend to be cost centers.
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 simply cannot upvote this enough.
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 found the article answered most of the questions it posed, but this one came and went unexplained...
Banks aggressively partition staff based on job duties and levels within those duties.
Why?
One phrase that comes up is "segregation of duties" meaning things like "if one person can do X and Y then they can commit fraud without being caught." So the principle of "segregation of duties" means that the people who can do X are on different teams than those who can do Y.
It doesn't only happen at banks, though.
Like, specifically: please don't let your operations people in books and records have access to your treasury and reconciliation systems. Or, don't let front-office people have access to middle-office systems. See: Leeson, Nick; Kerviel, Jérôme.
Efficiency fallacy.
"We can generate more throughput in the system as a whole by negatively incentivizing each component to work itself to death."
See Goldratt, Eli.
"No system will ever be able to answer all interesting questions about a user; that is formally undecidable in computer science." What? Are they talking about the halting problem? This seems like a stretch without defining what constitutes "interesting" in a very weird way.
Please accept this as a handwavy gesture at the halting problem for an audience which has on average something like 0.2 engineering degrees.
So what particular banking customer data management software do you have in mind that's adversely affected by the halting problem? (Edit: Ha, didn't notice you were the author!)
Hello, Mr Bank Manager, I have enrolled into a game show which will cost me half my account balance if it's even, otherwise they will triple it and add one...
For better or worse, the side channels are not an accident. They are extremely intentionally designed. Accessing them often requires performance of being a professional-managerial class member or otherwise knowing some financial industry shibboleths
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
The "intentionally designed" part isn't just the mail, it's the process that comes after receiving mail. The VP of Retail Banking does not read their own mail. Who does read that mail? How are various letters delegated to appropriate teams? What letters are discarded or given a canned response? How does the bank make sure that it doesn't ghost people (most of the time)? It basically needs an entire support system, which may or may not rely on parts of the official support system
Not sure if this is what he meant but you can call a bank or visit a branch, get a phone number for a specific department and call them directly and get almost VIP levels of helpful service in my experience.
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.
That is an example of a side channel.
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.
I used to work in a company selling core banking systems and yes they are a mess. I never imagined they would still be running in 2023. I could write a book full of horror stories. What amazes me is how so many banks do ok despite a massive failure to delight customers or innovate. Banks are literally “a license to print money”.
Out of curiosity, was it metavante?
No, Misys
I’m having trouble remembering, but that was the predecessor to finastra phenoix right? I’d love to grab you virtual coffee and talk - chris@prelim.com
I don't know what banking is like in the US, but having to deal with a UAE bank was a culture shock for me. This article made me understand why it's so shitty. No one seems to want to do their job. Everything — I mean everything — takes ages. The branch employees are utterly powerless. The only thing they can do right there and right now is cash transactions, everything else requires a form to be filled and signed and sent "to the back office" for the thing you asked for to maybe happen in "3 to 5 working days". I have only tried calling them once. They use a toll number, but then still try their hardest to "solve your issue" through an automated voice menu before you have any chance to talk to a real human. Writing to the right person directly to their work email sometimes gets your problems solved very quickly though.
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.
Passage about checks is simply not true.
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.
Passage about checks is simply not true.
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.
Interesting read, as usual.
"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.
The reality is the person also got paid $500 on the same day, but even though the paycheck arrived early in the morning, the bank chose to process it late at night to collect that $35 overdraft fee in the meantime.
Down significantly.
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).
Funny comment about First Republic and Chase.
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.
Too funny. I am in the exact same boat. For what it's worth I spoke to their customer service (Chase) yesterday who indicated that the auto-payment would continue to work as it always had, but will process "10 days late". So I'm expecting it to come out of my FRB account on the 10th or the 13th.
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.
I think I also saw that only this _first_ auto-payment will work -- after that you have to set it up at Chase if you want to continue auto-payment.
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".
Sometimes the bank will have ability to e.g. share context between their screen and the Tier 2 rep; sometimes they’re literally incapable of proving to the bank that they work there.
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.
I'd have been even more anxious if the workaround for the missing OTP was him saying "trust me, I'm the manager, the customer is very upset" or some other thing that's trivially socially engineered by a competent scammer...
Great article. Explains the chalenges that I just had with having all money frozen with Marcus.com. It is literally impossible to break through these layers of support in order to get your case heard / solved. The biggest challenge is that it‘s so intransparent with very little communication from the bank as to how a support case is actually moving through and how close it is to getting resolved.
Did you read the article carefully enough? It gives you several ways to get to the "useful" support. But besides his way of writing the right kind of letter, you can make a CFPB complaint.
Treat bank accounts like an unreliable host. You wouldn’t have a single database instance running your entire business like you shouldn’t have a single bank running your business.
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.
By far the most pro comment in this thread, should be much higher.
What about 'neo banks'? I am with Revolut free tier and I know why they have a free tier/basic tier, because I know they monetize my bank statements and purchase habits for 'market research' and other insights.
Revolut is a EU bank and has the same regulations, AML, KYC rules as other banks. There are tons of stories about closed accounts by revolute.
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.
And partly, we as a society have to make some tradeoffs. We want something from 12 CFR § 21.11(k)(1) . It was not written by accident or because the drafters were stupid. Every future with 12 CFR § 21.11(k)(1) in it will include many Americans whose bank accounts are closed for no reason that can be disclosed to them. Many of them will have done nothing wrong.
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)
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).
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?)
Insightful and nicely written. I spent decades in finance including investment banking and as a director/founder of a small retail operation. A lot of this really rings true.
It also managed to hit home some issues I experienced recently. Long time ago, I was a teller/banker and I was still selling, but the recent experience of in person account opening was just bad ( no rate quote, disclosures thrown at the end for the sake of compliance, and promise of a call back for an issue I raised that I never actually got.. come to think of it ). The poor kid did not know anything about what he was selling and that was basic UTMA savings.
Anyway, what I am saying is that is well worth the read; especially the bit about constant firefighting.
The current CTO at the place where I work has multiple years of experience in tech within the banking sector. Ho once said that, if you'd be aware of the systems the banks are using, you'd keep your money in a sock.
And, as a particular thing which could help unlock that: if one cares a lot about the experience of people at the socioeconomic margins, one should perhaps spend less time fulminating about greedy capitalists and spend more time reading Requests For Public Comment by relatively obscure parts of the administrative state.
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.
"Your Princess Is In Another Castle" made me snort. Nice work @Patio11
if one cares a lot about the experience of people at the socioeconomic margins, one should perhaps spend less time fulminating about greedy capitalists and spend more time reading Requests For Public Comment by relatively obscure parts of the administrative state
This is the antidote to many a HN commenter.
I didn't read the article as it appeared to go off on tangents that don't really get to the heart of the matter: SARs and everything else are super super secret and there are severe penalties for even cluing someone in about them. There is a lot of bullshit clockwork that is hidden from consumers under the guise of anti-money-laundering and anti-organized-crime stuff. If I recall the training correctly, you aren't even allowed to acknowledge there is this whole secret process!
Which is stupid. All of this is because FinCEN has banks by the balls
It has been instructive to experience banking in the Netherlands after living in the USA most of my life. Transferring money to any other IBAN number, even large sums? Ridiculously easy, and available immediately in the recipient’s account.
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.
The corollary to this "if your account was abruptly closed with no explanation, it was a pile of SARs, so sorry" story is that when you're at an airport and weird stuff happens, the best boogeyman reason is air marshals.
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.
Ops feels like the world is on fire because the world is always on fire
This gave me a chuckle. :)
The fine article mentions "Banks are extremely good at tracking one kind of truth, ledgers." In some cases that's - alarmingly - not even true. Or at least they are running their ledgers in ways that are so counter-intuitive and undocumented that they don't make sense to their customers. I.E. it's self-serving at best.
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.
This could also apply to the way airlines see passengers. In my experience, passenger information is scattered across different systems and representation. One system tracks the reservation itself, which has information 1 or more passengers. Another system tracks the fare and various feeds paid or due. Another tracks check-in status. Yet another has seating information. Bags checked live somewhere else. There's not a common key. There are of course confirmation numbers (those 6-character codes), but only after a reservation is confirmed. If a person has a frequent flyer code, that's another key.
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.
"If you think that talking to a compassionate human is a core part of the banking experience, there are many banks in Iowa who will sell that service to you. If you simply want to access your money on your phone and have that almost always work, Cash App will happily operate as a front end over Lincoln Savings Bank to make that happen."
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.
Due to the deskilling of the bank branch, the people at a bank branch, including the branch manager in many firms, can only offer solutions to relatively straightforward problems. For the other ones, they also have to call into a support phone tree. Sometimes the bank will have ability to e.g. share context between their screen and the Tier 2 rep; sometimes they’re literally incapable of proving to the bank that they work there.
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.
It's strange how Patrick, one of my favorite writers in the tech business, is stating a lot of his anedoctal experiences as fact.
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.
Then you have Tier Three, which at some firms sits in Customer Service and at some firms sits in Operations. There exist some ambiguity and spectral ranges here, but at some point the job changes in character from “low-wage peon reciting a script” to “professional who has a career doing this and is no longer managed on a tickets-closed-per-hour basis.”
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.
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.