I Love My TSA Pre, I Would Love A “Fed Pre” As Well

There has been much comment in the media, both in the U.K. and U.S., about the issue of banks either denying accounts to people or closing the accounts of existing customers. In fact it’s taken on the appearance of something of a moral panic in recent time. What is slightly puzzling to me is that people are getting angry with the banks when the banks are responding rationally to the economic incentives set for them by their regulators. If people want to get angry about this stuff, they should be getting angry with the government and the Financial Action Task Force and the various people responsible for the regulations.

Suspicious Activities

We’ve all heard stories about friends or colleagues finding them, or their kids’ sports club or their elderly parents or their cousin’s small business, getting a letter from the bank saying “sorry, your account is being closed, there’s no point calling us because we can’t tell you why”. These are stories about what banks refer to as “exiting” or “de-risking” and, as an interesting piece in the New York Times
NYT
points out, this isn’t about banks getting tough on people who bounce checks: this starts with regulators and then trickles down through bank compliance departments and on to account managers.