De-banking: Uncovering the Harsh Reality Behind the Mocked Term
Summary:
In a response to a Saturday Night Live skit making fun of Donald Trump's use of the term "de-banking", this piece highlights the serious implications of having financial accounts unexpectedly closed or frozen—a reality many Americans and cryptocurrency users face. Amidst growing incidences of financial controls and surveillance, the article underscores the need for reforms in financial privacy in the US, affirming that although Trump has concocted numerous terms, "de-banking" isn't one of them.
During a Saturday Night Live skit aimed at poking fun at past president Donald Trump, an implication was made that the term "de-bank", used by Trump during a campaign rally, was a figment of his imagination. But for the myriad of individuals who've had their financial accounts closed or frozen, this concept is no laughing matter. This came to light when Trump informed an audience in New Hampshire that banks and regulators would not be allowed to terminate people's accounts - a process known as "de-banking". In response, Colin Jost from Saturday Night Live jested, “I’m not sure what ‘de-bank’ signifies, but it may result in a ride in ‘de-ambulance’ to visit ‘de-doctor.’” While this elicited laughter from the studio audience, many citizens throughout the country didn't find it humorous.
Unfortunately, exclusion from the financial ecosystem is a dilemma that several Americans are grappling with. The New York Times, in 2023, carried numerous stories about individuals in the US whose banking accounts were abruptly closed without any form of explanation. One of these customers felt criminalized by the situation, declaring, “I am of the belief that I warrant an explanation,” and that the method used to close the accounts made them feel like a criminal.
Those using cryptocurrency are also conversant with the issue of de-banking. Nic Carter from Castle Island Ventures in early 2023 termed it as “Operation Choke Point 2.0.” According to him, “The government of USA is utilizing the banking sector to set up an intricate, extensive clampdown against the crypto sector.” There had been incidences of government officials pressuring banks and which were followed by declarations from banks that they would discontinue cryptocurrency services and sever ties with cryptocurrency users.
Despite this, de-banking is not a commonly discussed term. The majority of the monetary surveillance carried out under the Bank Secrecy Act arrangement in the US rarely becomes popular talk. This is by design, largely because financial controls are used discriminately, thus difficult to spot. When law enforcement officers overstep their boundaries, evidence is easily accessible due to photos and videos which rapidly circulate on social media. But when financial sanctions are employed, the moment of impact typically occurs when victims get a notification from their bank that their funds are inaccessible.
Worse yet, clients are kept in the dark since the law demands that banks should not disclose when customer information is reported to the government. Moreover, simply being the subject of a report or having an account closed does not mean the person is guilty of any crime. Nonetheless, when de-banking is a result of political pressures and compliance costs as opposed to a breach of the terms and conditions, inactivity, frequent overdrafts, and even restructuring, it is another indicator that the call for reforms on financial privacy in the US is long overdue.
Therefore, though Trump has invented many terms, "de-banking" is not one of them. Nicholas Anthony, Cato Institute’s Center for Monetary and Financial Alternatives analyst and author of The Right to Financial Privacy: Crafting a Better Framework for Financial Privacy in the Digital Age shared this view. This article is merely informative and should not be considered legal or investment advice.
Published At
2/6/2024 6:19:47 PM
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