1/ HOW TO FIX THE U.S. DEBANKING PROBLEM, a 🧵by someone who set out to solve it but ended up repeatedly targeted by it (+ whose bank has a lawsuit against the Fed pertaining to it).
This is a #MeToo-type moment in banking, as stories are now pouring out.
How to fix it?
This is a #MeToo-type moment in banking, as stories are now pouring out.
How to fix it?
2/ As @pmarca alluded on @joerogan, the levers of power used/abused by federal bank regulators to effectuate #debanking are subtle & insidious. Multiple attempts have already been made to fix the problem. Why did they all fail? bc it's a multi-faceted problem that runs deep.
3/ Truly fixing the problem will require overhauling the federal bank examination process for operating banks. Why? a) subjective levers in federal bank exams have proven to be too easily politicized, b) confidentiality of supervisory info & c) no checks & balances in practice.
4/ Here are just two examples of the many levers that a federal bank examiner can pull to pressure an operating, federally-supervised bank: reputation risk & adverse media screening of bank customers.
5/ Federal bank examiners include a bank's "reputation risk" as part of what's called the CAMELS rating process when they examine operating banks. It's easy to see how "reputation risk" is subjective & can become politicized, if higher-ups at federal banking agencies want it to.
6/ Many of the famously #debanked people/groups were likely caught by the amorphous "reputation risk" issue. Among the famously debanked are Kanye, @mercola, religious groups defended by @SamuelBrownback (who coined the hastag #ChasedAway) & of course the #crypto industry.
7/ The first #OperationChokePoint hit 30 different industries deemed "high reputation risk" by the FDIC, starting with payday lenders & expanding to firearms, adult entertainment, gaming, etc.
It's long past time to remove reputation risk from the CAMELS rating process. #Afuera
It's long past time to remove reputation risk from the CAMELS rating process. #Afuera
8/ Next, let's discuss the rqmt for banks to screen customers for "adverse media." Consider how many hit pieces have been released on #debanked people/groups.
Has it ever occurred to you that planting hit pieces might be a deliberate tactic to get political rivals debanked???🤔
Has it ever occurred to you that planting hit pieces might be a deliberate tactic to get political rivals debanked???🤔
9/ I hope you can now see that passing non-discrimination laws or fair access rules alone won't fix the #debanking problem--not even close. I shared just 2 of many subjective levers that politicized federal bank regulators have at their disposal--raw power, as @pmarca described.
10/ So, fixing the #debanking problem requires closing off those levers one by one--& that may require the new administration's FDIC, OCC & Fed appointees to be in place & cooperate. But Fed Vice Chair for Supervision Michael Barr said he's not leaving until July 2026.🤔
11/ So, will Michael Barr continue to do @ewarren's bidding & block @DOGE from ending politicized #debanking??? He's the top official behind it at the Fed (you can see him listed on @nic__carter's infamous March 2023 chart naming the architects of #OperationChokePoint2.0👇) 
12/ Next, how's it possible that #debanking stayed so quiet for so many years? Simple: it's a crime to disclose "confidential bank supervisory information." Functionally, CSI shields the culprits behind #debanking just as non-disclosure agreements shielded the #MeToo culprits.
13/ Congress & @DOGE can provide protection for whistleblowers as well as non-retaliation protection for banks & reporters that disclose CSI.
Most #debanking isn't actually the banks' decisions--it's federal regulators applying back-room pressure on the banks, shielded by CSI.
Most #debanking isn't actually the banks' decisions--it's federal regulators applying back-room pressure on the banks, shielded by CSI.
14/ But CSI laws weren't written to shield federal regulatory overreach from becoming public--rather, they were designed to protect the integrity of the banking system.
15/ Finally, checks & balances--there functionally aren't any to prevent the abuse of power by politicized federal regulators, & no real consequences for the abusers. @DOGE has already announced that agency inspectors general need to be independent👏, which is a good first step.
16/ I'll close by reminding readers that States can help fix the #debanking problem. #Wyoming has been trying to solve it since 2018 when many entrepreneurs testified that they lost their businesses after being debanked. Their testimony resonated w/ legislators who experienced...
17/ ...the first #OperationChokePoint, incl one whose firearms co was #debanked. Wyoming created a new type of bank to address #debanking of law-abiding customers. 7 years later, the problem still isn't fixed (the Fed blocked the new banks & then targeted us for #debanking too).
18/ Oral argument in @custodiabank's Fed lawsuit is Jan 21, the day after Inauguration Day.
Other States, including Florida, are also pursuing State-based solutions to the #debanking problem.
Other States, including Florida, are also pursuing State-based solutions to the #debanking problem.
19/ @JimmyPatronis, Florida's CFO, proposed to create a State-owned bank (the Florida Sunshine Bank) in the wake of many #debankings of Floridians, including the Trump family & @mercola (+ Mercola's corporate executives individually & even their spouses).
20/ Hopefully you can now see why eradicating politically-motivated #debanking isn't a simple fix. Each lever of federal power that proved prone to politicized abuse must be shut down. But it can be done! People who know where bodies are buried, please keep coming forward!🙏
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