A recent executive order that President Trump issued to stop regulators from abetting and even compelling the “debanking” of bank customers for their political views is clear and on-target.
On-target as far as debanking by banks goes.
But Reclaim the Net notes a glaring omission. The order’s identifies financial institutions willing to blacklist customers for possessing the “wrong” political opinions or missions. (“Wrong” here means not too pro-criminal or pro-terrorist but too constitutionalist, too much in favor of individual rights of the First or Second Amendment variety.)
The problem is that the order says nothing about major payment processors like Visa and PayPal.
Now, perhaps a penumbra of the new regulatory marching orders would influence the policies of the credit-card companies, whose cards are after all typically issued in cooperation with banks. But this is highly uncertain.
And Reclaim the Net thinks that Visa and Mastercard, “the twin tollbooth operators of the global payments highway,” are, like PayPal and Stripe, untouched by Trump’s order. Yet all of these payment processors have in recent years been blacklisting individuals and organizations that the processors happen to disagree with.
The practice goes back at least to the Obama administration, which instructed regulators that it could regard something called “negative public opinion” as a legitimate risk factor.
This doctrine “quickly turned into a permission slip for politically driven account closures.”
The government shouldn’t be issuing such “permission slips” — or implicit instructions — to banks, payment processors, or anybody.
This is Common Sense. I’m Paul Jacob.
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3 replies on “Banks Not the Only Debankers”
We have seen, for some decades now if not indeed for most of history, that not only do those at the commanding heights of culture seek to steer aggregates such as scientific consensus, public opinion, and the popular vote but that those folk will make efforts to fabricate each of these aggregates as a means of steering them or when they cannot be steered to where our ruling class wants them.
Bad enough, then, that the Obama Administration greenlit regulating against those viewed negatively by the general public; some of the targetted weren’t actually so viewed.
And what a terrible social order we now have. A defense of “Ich habe Befehle befolgt!” [“I was following orders!”] was once held to be inadequate, yet our bureaucrats will skate free with a defense of “I was within guidelines!”
Aren’t Visa and Mastercard tools of the banks? Doesn’t the bank pay a fee to these organizations to issue the credit card that bears their name? How would Visa, for instance, get to debank a cardholder without the consent of the bank itself? I have a card from a wholesale club, but it can be used anywhere Mastercard is accepted and the billing is handled by a bank. I’m guessing that the wholesale club might lose its license to issue Mastercard (which is used to spur customer loyalty, with points and rewards), but it’s only a guess. Such action taken for political reasons could have broad ramifications on the brand itself if it goes around canceling licenses of large or small retail operations.
Trump’s order applies not to any and every financial activity that might be undertaken by an institution that is a bank, but to classes of banking activities. Moreover, for a bank to acquiesce to something decided by Visa or by MasterCard (with or without pressure from regulators), that acquiescence wouldn’t quite be the same as the bank making the decision.