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People constantly tell me that Trump is deregulating. What’s the proof? Well, the stock market is going up. Unemployment is going down. It is impossible to explain to them what they knew when Obama was president: a rising stock market and falling unemployment do not mean that the president’s policies are good. But now they’ve unlearnt it and no magic words from me will teach it to them. It will probably take a President Warren to push this knowledge back into their heads.
Anyways, the Obama-Trump boom continues. And people think that Trump is deregulating. Well I have a personal observation to share. In brief: there is no deregulation in banking.
As I was departing on my last trip to Canada and then the UK, the bank used by my company notified us that it was shutting down our accounts. The reason? Compliance. Both gold and hedge funds spell “risk”. They decided not to incur the risk of having us as a client. We banked with them for 5 years, never bouncing a check. We have a compliance officer, a third party fund administrator, an outside auditor, a securities law firm, a broker-dealer partner, and a series 24 supervisor. We have more people making sure we are compliant, than we do making sure we are profitable.
For all they were concerned, we were suddenly unbankable. No, they were not willing to extend the deadline. Everything was very hard-edged, the opposite of how most people expect employers to treat employees, landlords to treat tenants, etc. But we are not a consumer, but a business.
You would not believe how hard it was to find another bank who would say yes! I hardly believe it, and I went through it. We finally set up new accounts at a new bank. But even there, a simple transaction at a local branch was rejected. Why? The computer screen said we are a “high risk” client. I had to leave, stymied after 45 minutes. After discussion with the corporate accounts people, the local branch was given whatever they needed and we were back on.
So I returned to the branch, and spent 2.5 hours with the assistant manager. I did finally get the transaction done. But I had to jump through more hoops than a dolphin at Sea World. So having had the experience with bank 1, and banks 2, 3, 4, etc. and now this with the bank who accepted us, I had to ask a question of the assistant manager.
“Has there been a recent push in your bank for tighter compliance?”
“Yes, in the last two months they changed everything. We are closing accounts of many businesses.”
Because, terrorism and drug money laundering. Or something.
Regulation not only did not decrease in banking, it increased significantly.
P.S. Being a monetary economist, I have to point out something. My transaction should have taken 10 minutes with a teller. It ended up taking 3 hours of assistant manager time, plus several other manager level people at corporate. The bank hasn’t changed their price yet. But when they do, it will go up 2500%. It will have to, to cover the bank’s cost. People will call this inflation, but it has nothing to do with the Fed or the dollar. It is merely higher costs due to additional regulatory burden imposed on the bank.
© 2017 Monetary Metals
We are a large chain of pawnshops.
Hugely regulated. From every transaction requiring a customer fingerprint and signature, to regular Sheriff “inspections” to oversight from the Consumer Protection Bureau etc etc.
We are a solid multi million dollar organization, never bounced checks, always money in the 15 different checking accounts we maintain, plenty inventory, we own real estate…Solid. We wake up one morning to find our 15 checking accounts at our big institution huge bank have been shut down. Why? Eventually we get an answer. “Your business has been designated ‘High Risk’ ….”
We have managed to find another big institution bank where we have ‘happily’ banked since our ‘expulsion’ from the last bank.
Keith is 100% correct. Too much NONSENSE regulation and getting worse…… It’s no coincidence that the younger generation see more of a future in bitcoin etc than in conventional banking and other highly regulated traditional institutions….
Monetary Metals, keep up the great pioneer work !
What ever happened to “know your customer”? If you two weren’t solid customers then who the heck is…
You might want to look up who wrote the recent (regulatory) bills in question. Probably one of our favorite socialists. This stuff doesn’t happen by chance. There’s always a reason.
If Washington was filled with nothing but the well-meaning and the under-qualified, they would at least make a mistake in our favor once in a while. But they don’t. Every move has been against freedom and the free markets, consistently.
What a shame, and what bad timing for you to spend your holidays in the bank instead of Christmas shopping… “supporting the economy”
So let me get this straight, Steady-Eddy gold is risky but Blistering Bitcoin is safe? I get it, and there’s no political war on the yellow stuff either… it’s all just legitimate concern over those darn terrorists again.
While you’re thinking that over, don’t forget to leave some cookies for Santa.
One bank told me that if a business accepts bitcoin, even a small portion of its revenues, they will shut down the account. Money laundering risk.
Money laundering isn’t a sure thing with casual use of cryptocurrencie. “The blockchain” makes a direct connection between (say for example) coins paid to a contract killer and my bitcoin wallet, if they happen to land there. Should the killer’s victim’s family win a suit against the killer and attach his payment as part of their settlement, do we have any precedent to keep a court from seizing the contents of my wallet? Did the killer’s ultimately faulty use of crypto-anonymity let him/her launder their ill-gotten gains? If not did redeeming said gains for goods make me an accessory to the crime? What bank wants to even be part of the legal exploration of such questions?
The banks are controlled from above. The same above, that amended the Smith Mundt act in 2012. Reality is falsified the system is based debt slavery and any in competition (free markets are being wiped out). They need to control everything eg Afghanistan opium. Chinese expansion and debt. Figure it out.
~”It will probably take a President Warren to push this knowledge back into their heads.”~
Bite ‘cho’ tongue, Keith. I’m not ready for a “native American” head of state./s
Now you know what Cass Sunstein was up to for almost 8 years in the Obama Administration. It’s not about money, it’s a bout control. This is part of the herding into the cashless society, hence the push against people dealing in gold or other “liquid assets” like in the pawn industry.
So it’s time to think ahead. Because unless there is massive change, the “global planners” will take over our lives not by legislation, but by regulation. What will you do once you can no longer find a bank that will serve you? If you think that can’t happen, tell it to the Jews of pre-WWII Germany, only this time the places to run to will be far fewer.
But you are right Keith, there is a need to push back. I would think that taking your business to a credit union might work. I don’t know. I dumped commercial banks some time ago, but I’m not running a big enterprise. Another option to act on is to get involved in sending someone in your district to Congress in 2018 who will fight to shut to the madness of Washington with them knowing full well that the Uni-party will try to coop them.
Merry Christmas to all! And a prosperous New Year! Peace on Earth and goodwill to all.
Theo
I am not predicting a president Warren, merely observing that people on both sides of the false dichotomy alternatively remember and forget certain universal principles depending on who is in office.
The rolls have been reversed, since 1930s germany, If what we are told about their banking arrangements at that time, were ever true. in the first place.
The jews were free to sell their goods and take the capital to Palestine until German shipping was targeted by the allies, therefore the jews at that time, must have had accessible bank accounts.